Finance

In the aftermath of the global financial crisis, few would dispute the risks of excessive borrowing. But which debts should one worry about – public or private? This column presents new research on the interplay of public and private debts since 1870 in 17 advanced economies. History demonstrates that excessive private-sector borrowing plays a greater role than fiscal profligacy in generating financial instability. However, when the credit boom collapses, the government’s capacity to alleviate the downturn is limited by the prevailing level of public debt.

Advisory Board members Carmen Reinhart and Kenneth Rogoff today issued a response to recent criticism of their paper “Growth in a Time of Debt.”

If Congress and the White House fail to raise the debt ceiling this week and the United States defaults on its debt, what can we expect and how can we protect ourselves against these events?

“You are now leaving the world as you know it.”

World leaders who are gathering for the APEC summit next week had hoped to be signing the Trans-Pacific Partnership Agreement (TPP). The pact would bring together key Pacific-rim countries into a trading bloc that the United States hopes could counter China’s growing influence in the region.

Sadly, it is questionable whether the economy has really improved.

what would measures of systematic risk have indicated to Treasury Secretary Paulsen if they had been available at that time?

How can we contain institutional failure?

A look at the large role the trade deficit of the United States has played since the 1980s.

The failure of Lehman Brothers on 15 September 2008 marked the beginning of the end of the world’s love affair with financialization.

What can emerging economies learn from the financial meltdown in advanced economies?

With the collapse of Lehman Brothers in September 2008, a crisis in part driven by derivatives on subprime mortgages, a seemingly obscure sector of the financial market help fuel the worst economic crisis since the Great Depression.

what have we learned from the crisis and what should we have learned?

Simon Johnson, Professor at MIT and former chief economist of the IMF, calls for much higher capital requirements for big banks.

How could reputable ratings agencies – and investment banks – misjudge things so badly?