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Will Trump herald a US economic boom?
Keywords: Rogoff, Kenneth Rogoff, ,
Kenneth Rogoff, Harvard University economist, author of the well researched book on the 2008 financial crisis, "This Time Is Different," gives his thoughts on the economic prospects for the U.S under the new Trump administration. He says 4% GDP growth and 3% inflation is possible temporarily for a while with stimulus policies, less regulation, and increased private investment. After 8 years of not investing in much needed infrastructure because of concerns about the deficit, the timing is right for such investments, especially as the economic effects of the crisis of 2008 gradually fade. This is about taking advantage of ultra low interest rates to invest in infrastructure. He says it helps that Trump policies are pro-business. He sees drawbacks as the stimulus program adds a 25% increase with extra debt, adding $5 trillion over 10 years, but adds that for many years Nobel prize winning economist Krugman and others have said that there is good reason to increase borrowing to invest, and this is now being tried. Inflation remains an uncertainty- if there are large quantities of underutilized and unemployed resources it would raise prices less than its effect to increase output. The reverse would apply if the U.S. economy is closer to full capacity. One factor that would help- increasing confidence for business and increasing investment. Against this what he calls optimistic view or spin, is the idea of mistakes under a Trump administration, errors made and a degree of incompetence which he says is a real possibility. Overall his view is that some risks are appropriate now, and from his deep study of financial crises sees the slow growth of the last 8 years a result of a financial crisis that now begins to fade, creating the possibility of higher growth under prudent policies.
Reinhart and Rogoff on the lessons from other financial crises for the global financial crisis of 2008- it takes about 7 years to recover completely
02/03/2009
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A Warning on China Seems Prescient
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Kenneth Rogoff on the financial crisis in China with debt exceeding 270% of GDP, shadow banking, real estate bubble and unsustainable local government finances
08/24/2015
Kenneth Rogoff of Harvard, is an expert on financial and debt crises, with the most extensive quantitative study of debt crises of 66 countries with Carmen Reinhart. The research is published in the book, "This Time Is Different." He discusses the debt crisis in China with the NYT's Andrew Ross Sorkin, saying China is not immune to the problems from an alarming buildup of debt. He says the reason China was seen as impervious to debt problems is because of the high savings rate of 30%, the millions of migrants moving to cities for manufacturing work, and government control of markets. Actually he sees China as a really good example of "This Time Is Different," the notion that somehow it can't happen here. The result is along delay before an event and the sudden speed of the implosion once it hits. The effects Rogoff sees are the risks to commodity producing countries such as Russia, Brazil, and other countries dependent on exports. He says China's large foreign exchange reserves offers a way for it to manage the debt crisis.
Grouped Articles
A Warning on China Seems Prescient
New York Times 08/24/2015
China facing full-blown banking crisis, world's top financial watchdog warns
The Telegraph 09/19/2016
Will Trump herald a US economic boom?
The Guardian 12/07/2016
China’s Economy Grows 6.9%, but Warning Signs Persist
The New York Times 04/17/2017
Moody’s Cuts Its China Rating for the First Time Since 1989
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In Downgraded China, Echoes of Japan’s Boom and Bust
WSJ 05/24/2017
The caution in raising rates of the U.S. Federal Reserve in 2015 and memories of the emerging market crisis in 1997
09/17/2015
In 1997 Federal Reserve rate increases worsened the situation in the fragile Mexican economy, with Mexico needing a large bank bailout. Contagion to other countries was also a large problem at the time. Harvard economists Kenneth Rogoff and Larry Summers, cite the situation facing emerging markets with the sharp fall in commodity prices and the decline in the value of the currencies, particularly Brazil, Indonesia and Russia, countries dependent on commodity exports, creating risks in the global economy that the Fed could not ignore. The debt crisis in China and slowing economy, with missteps by the government in handling the stock market decline, happened in August-September 2015, creating added uncertainty- making Sept 15, 2015, too soon for the Fed to risk even a modest 0.25% increase in rates.
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Kenneth Rogoff, on the prospects for the U.S. and global economy under the Trump administration in 2017-2020
12/08/2016
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Will Trump herald a US economic boom?
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Opinion: Trump in offside position | Business | DW.COM | 12.01.2017
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Reviews of "This Time is Different" by Rogoff and Reinhart
01/21/2008
Boom, bust cycles, with high indebtedness, asset bubbles, and unsustainable current account deficits are followed by long periods of slow or nonexistent growth say Rogoff and Reinhart in their new book. This raises questions about the now current hypothesis that economic recovery will take place in 2011-2013. As the book's title suggests there are long periods in history that show this and it is gaining in credibility as the column by David Wessel in the Wall Street Journal July 21,2011, suggests.
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Seminal Economic Paper on Debt Draws Criticism
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BusinessWeek 09/16/2010
What Other Financial Crises Tell Us
Wall Street Journal 02/03/2009
New York Times 03/01/2009
Alternative views to the economic contractions and slow growth theory after financial crises in Rogoff's "This Time Is Different"
02/03/2009
Grouped Articles
Seminal Economic Paper on Debt Draws Criticism
Wall Street Journal 04/16/2013
New York Times 04/18/2013
Spreadsheet Slips Not Economists' Only Problem
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What Other Financial Crises Tell Us
Wall Street Journal 02/03/2009
New York Times 03/01/2009
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Kenneth Rogoff and Jeremy Bulow on Greece's financial crisis 2010-2015 and the situation in July 2015
07/07/2015
Kenneth Rogoff of Harvard is one of the leading experts on financial crises, and is the author with Carmen Reinhardt of the quantitative history of financial crises in various forms worldwide, including excellent chapters on crisis detection and prevention, titled "This Time is Different," (2009). Bulow is professor of Economics at Stanford. Rogoff and Bulow say the debt restructuring is not the problem as this could be renegotiated later, and it is financed with loans from the EU for interest at low interest rates, as pointed out by other experts including Greece's finance minister during the Samaras administration 2012-2014. They point out that Greece without eurozone net new loans and aid of 80 billion euros during the period 2010-2013 would have had to make larger cuts. Greece received income transfers from European neighbors to run a 3% deficit in the budget, and receives additional 2% in EU aid transfers, for a total of 5% in income transfers under the deal offreed to Greece in June 2015, say Rogoff and Bulow. Without this it would be much worse off. This is clearly not the narrative in the Greece referendum, and does not reflect the situation say Rogoff and Bulow, where Greece has to come up with its own budget solutions and choices- which inevitably under any party including Syriza involve serious cuts and hard choices. Rogoff and Bulow do not comment on the criticism that the IMF and EU may have pushed too hard to have Greece bring the deficit down to 3% in a short period, damaging the political credibility of the main centre right and centre left parties. The IMF appears to have corrected this by 2013 pushing for growth and asking for flexibility for France, Spain, in meeting deficit targets. At various points the IMF has pushed harder for change in Greece for long term reforms in areas such as tax evasion where very little progress has been made to collect about 11 billion euros a year of missing revenues, and pension reforms, which may have inadvertently hurt the position of the centre right gover
Grouped Articles
A Grecian Formula for Courting Disaster
Wall Street Journal 07/07/2015
Will Trump herald a US economic boom?
The Guardian 12/07/2016
Eurozone Gives Greece Some Debt Relief as Bailout Nears End
WSJ 06/22/2018
Views on U.S. economic growth and Federal Reserve interest rate policy in 2017-2018
12/14/2016
Neil Irwin, Binyamin Applebaum of NYT, and others offer views on how Federal Reserve interest rate policy can come out in ways different from what is expected.
Grouped Articles
Will the Trump Era Bring Higher Interest Rates? Don’t Count On It
The New York Times 12/14/2016
A Trump Economic Boom? The Fed May Stand in the Way
The New York Times 12/13/2016
Will Trump herald a US economic boom?
The Guardian 12/07/2016
How Donald Trump May Actually Widen the U.S. Trade Deficit
WSJ 12/12/2016
Fed Raises Rates for First Time in 2016, Anticipates 3 Increases in 2017
WSJ 12/14/2016
The Fed’s Era of Easy Money Is Ending
The New York Times 03/13/2017
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