It’s a very busy period even though you’re always at home. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. But at the end of this, I think we’re going to have experienced an extremely negative productivity shock with deglobalization. KR: It’s fiscal policy that they’re doing in this emergency situation. So certainly we would strongly endorse doing what governments are doing. Obviously, this has been done to differing degrees of effectiveness in different countries, with Asia reacting much quicker and with much better near-term outcomes than Europe and the U.S. BM: How do you regard the economic policy response? It’s obviously a surreal experience overall. From 2001 to 2003, she returned to the International Monetary Fund as deputy director at the Research Department. Reinhart, Carmen M., and Christoph Trebesch. You really can’t use that experience as any template for this. "The International Monetary Fund: 70 Years of Reinvention." Outside of Reinhart's professional activities, she has received compensation for conference-related and speaking engagements, advisory boards, as well as writing and royalties. Carmen Reinhart, Wikipedia ... Romer's later work, with her husband David Romer, has concentrated on the effect of tax changes on the US economy. Is this time different? She received her Ph.D. from Columbia University. She and her husband are impeccable economists. (2010) "Growth in a Time of Debt." They have one son. Carmen M. Reinhart (nÃ©e Castellanos, born October 7, 1955) is a Cuban-born American economist and the Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School. I don’t think we’ll return to their precrisis normal. If the euro zone doesn’t find a way to deal with this, maybe eurobonds might be in the picture to try to indirectly provide support. By most metrics the U.S. was at or near full employment. During the early days of the coronavirus pandemic, in March 2020, Guayaquil, Ecuadorâs business capital of some three million people, was in trouble. Moreover, since interest rates were already near zero, the standard monetary tool of lowering rates was not going to provide much help. Ecuador already is in default status, as well as Argentina. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. “I don’t know how long it’s going to take us to get back to the 2019 per capita GDP. BLOOMBERG MARKETS: How are you faring during the lockdown?  She is a Research Associate at the National Bureau of Economic Research, a Research Fellow at the Centre for Economic Policy Research, Founding Contributor of VoxEU, and a member of Council on Foreign Relations. KR: Of course, the “Fed lower forever” is part of it. Let’s take monetary policy before the pandemic. And part of the story is debt. James L. Rowe Jr. profiles Carmen M. Reinhart, who focuses on facts and history Had Miami Dade College offered a concentration in fashion design, Carmen Reinhart might never have become an economist. Finance & Development, June 2013, Vol. If the savings are just going to be used to repay debts to China, well, that would be a tragedy. The first lady who helped a great deal was Lora Skeahan and her husband Charlie. But if they don’t say that, and every country’s left on its own to work something out, I think we get back to my Covid-19 hospital analogy where the system just gets overwhelmed. The financial markets think there’s no chance interest rates will go up. And let’s remember, their population dynamic is completely changing. The authors became the go-to experts on the history of government defaults, recessions, bank runs, currency sell-offs, and inflationary spikes. I liken the incident we’re in to The Wizard of Oz, where Dorothy got sucked up in the tornado with her house, and it’s spinning around, and you don’t know where it will come down.  Rogoff and Reinhart claimed that their fundamental conclusions were accurate, despite the errors. It’s certainly different from prior pandemics in terms of the economy, the policy response, the shutdown. The recovery is unlikely to be V-shaped, and we’re unlikely to return to the pre-pandemic world. Graciela L. Kaminsky and Carmen Reinhart. Contact Us. To feed nearly 60 million people, give them food and water and concentrate medical attention? ... Reinhart Realtors 2452 E Stadium Blvd Ann Arbor, Mi 48104 734-971-6070. CR: How much of the resilience, if not ebullience, in the market is policy driven? Ultimately I hope we don’t see a big change in central banks, but we’re probably going to need an expansion in finance ministries to take on and regularize and legitimize some of these responsibilities. Carmen M. Reinhart is Professor of Economics and Director of the Center for International Economics at the University of Maryland. Do you see an inflationary surge at some point? CR: Some of the scars are on supply chains. If you look at the year 1918, when deaths in the U.S. during the Spanish influenza pandemic peaked, that’s 675,000. On the issue of negative interest rates, I do not share Ken’s views on that particular matter. For the G-20 initiative, I indeed hope it is the G-20 and not just the G-19.  In the 1990s, she held several positions in the International Monetary Fund. Let me just point out another issue in terms of the policy response. Reinhart is ranked among the top economists worldwide, based on publications and scholarly citations. Kenneth Rogoff and Carmen Reinhart. Advanced countries have done this all the time—finding some sort of debt restructuring or writedown to give them fiscal space again, to support growth again. Itâs a very busy period even though youâre always at home. I hope Bernanke isnât re-appointed, or declines if offered. Central banks began to do fiscal policy not just this time around, but they began to do fiscal policy in the 2008-09 crisis. Adds IMF warning in second paragraph. Born in Havana, Cuba, Reinhart arrived in the United States on January 6, 1966, at the age of 10, with her mother and father and three suitcases. Husband of Carmen Reinhart, who co-wrote âThis Time is Different.â with Kenneth Rogoff. I also feel the markets have a very sanguine view of the virus and what’s going to happen and how quickly we can return to normal or maybe how quickly we will choose to return to whatever normal is. But we could have costs from this. But selling it as a free lunch, that’s stupefyingly naive. You can’t imagine trying to get these same subsidies passed through the Senate and the House in real time. And there was the shift to Zoom, which created more work because you’re trying to prepare differently and do your lectures differently. She became the subject of general news coverage when mathematical errors were found in a research paper she co-authored. BM: What is the appetite at the IMF for coming to the rescue? Please update this article to reflect recent events or newly available information. So we wanted to be close to family. CR: I actually wanted to go back to the Italy issue. But the policy response to pandemics that we’re seeing is definitely new. , A review by Herndon, Ash, and Pollin of her widely cited paper with Rogoff, "Growth in a Time of Debt", argued that "coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period". I’m just going to grade how you’re hiring extra workers at home.” Obviously how you’re doing on the battlefield is driving everything. KR: It’s not a free lunch, but there was no choice. That’s a very real possibility given past pandemics and if there’s no vaccine. Kennedy is executive editor for Bloomberg Economics in London. It has been translated to over 20 languages and won the Paul A. Samuelson Award, among others. BM: What about China, which also has leverage challenges? If they’re right, and if another shoe doesn’t drop, it’ll be fine. And you want to talk about a negative productivity shock, too. The world will follow a path similar to the 2008 global financial crisis, only worse, Reinhart and her husband, Vincent Reinhart, the chief economist at Standish Mellon Asset Management, write in the forthcoming issue of Foreign Affairs magazine. So the hit to emerging markets is just very broad. How else do we deal with what developing and emerging economies owe? Lastly I think we’re not in a position to use deeply negative interest rates because the preparation hasn’t been done. Among economists, they are heavy hitters. “If it drags on, the forces that are pulling the euro zone apart are going to grow stronger and stronger.”. For many emerging markets, we’ve also had a massive, massive oil shock. Also you probably need a debt moratorium that’s fairly widespread for emerging markets and developing economies. Kenneth Rogoff, and Carmen Reinhart. The rest of the world is going to be in recession. Vincentâs brother lives in this area. In a paper co-authored with her husband, the economist Vincent Reinhart, Carmen Reinhart looked at the aftermath of the 15 post-World War II financial crises. Nigeria, Ecuador, Colombia, Mexico—they’ve all been downgraded. Vincentâs brother lives in this area. That’s a big issue. There are a lot of geographic changes that are being necessitated because, if the economic downturn has been synchronous, the disease itself hasn’t been synchronous. (2010) ". They started their book around 2003, years before the economy began to crumble. So I think the settling point for Chinese growth is going to be well below 6%. In 2008 it was the rich countries and not the emerging markets. China came into this with inflation running over 5% because of the huge spike in pork prices. So 3% growth in that, with that Europeanizing of their population dynamics, would not be bad at all. Carmen Reinhart, together with her fellow economics professor Kenneth Rogoff, wrote the highly acclaimedâ¦This Time Is Different: Eight Centuries of Financial Folly. The first book is Carmen Reinhart's This Time Is Different: Eight Centuries of Financial Folly. That, by the way, is really not the Wall Street definition of recovery, where recovery is going back to where the trend was. Previously, she was the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics. BM: And what scars are left on economies once the pandemic passes? Directed by: Professor Carmen M. Reinhart and Professor Carlos Vegh Department of Economics This dissertation attempts to address the elusive concept of âgraduationâ, that is the emergence from frequent crisis suffering status. But who can they export to? CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. That hasn’t materialized. BM: There is some question over the future path of inflation. If you look back to 2008-09, nearly everybody had a banking crisis. Vincentâs brother lives in this area. The other thing that I like to highlight that is very different is how sudden this has been. The true fall in GDP, economic historians will debate for years. The trio looked at 26 advanced economies where the public debt-to-GDP ratio exceeded 90% for at least five years. Many â¦ So that affects not just trade, but movements and people. And I think that would have been cheap money in terms of restoring growth in the euro zone and would have [been] paid back. So we wanted to be close to family. This is very, very destructive within the euro zone. Our son lives in this area. That’s where our social, political, economic system is at the moment. Illustrator: Marta Zafra for Bloomberg Markets. In terms of growth and productivity, they will be lasting negative shocks, and demand may come back. But it’s far easier to go the route of the G-20. (2009). 2 PDF version. So the abruptness and the widespread shutdowns we had not seen before. If you look at some of the legacies of the big crises, those have all seen fixed investment ratchet down and often stay down. And we may be at that same juncture in another couple of years where you’re looking at just staggering austerity in Spain and Italy on top of a period of staggering hardship. So that’s a big game changer, discounting futures. The reversal in capital flows in the four weeks ending in March matched the decline during the [2008-09] global financial crisis, which took a year. When the family moved to Miami, Reinhart started college at two-year Miami Dade College, before transferring to Florida International University, where she received a B.A. In both 2011 and 2012, she was included in the 50 Most Influential ranking of Bloomberg Markets. The Journal of Economic Perspectives 30.1 (January 2016): 3-27. It’s probably much larger than the measured fall. One thing that’s clear is the numbers are going to look spectacularly great in some months simply because you’re coming out from a base that was pretty devastated. The shock has disrupted supply chains globally and trade big-time. This is like war. Sustained negative interest rates in Europe have led to a lot of bank disintermediation. They have one son. Think about China. We have the first global recession crisis really since the Great Depression. There is no chance inflation will go up. Turkey is in terrible shape. Again, we’re going to see huge forces pulling apart the euro zone. , In a normal recession such as 1991 or 2000, the Keynesian tools of tax cuts and infrastructure spending (fiscal stimulus), and lowered interest rates (monetary stimulus), will usually right the economic ship in a matter of months and lead to recovery and economic expansion. She is â¦ Real GDP that year grew 9%. A lot of people don’t properly understand that governments own the central banks. We came to Florida, where weâve had a house for a decade. , Fellow economist Alan Blinder credits both Reinhart and Kenneth Rogoff with describing highly relevant aspects of the 2008 financial institution near-meltdown and resulting serious recession. We came to Florida, where we’ve had a house for a decade. But a lot of the firms aren’t coming back. Can you imagine if this had hit 50 years ago? And because of this debt, the normal tools of tax cuts and increased infrastructure spending were somewhat less available and/or politically difficult to achieve. Reinhart called her early life a âtypical American immigrant story.â Born Carmen Castellanos, she and her parents fled what they perceived as an increasingly dangerous situation in Cuba in 1966. And then there are the socio-political ramifications. Reinhart and Rogoff published another paper, Debt Overhangs, Past and Present, which they co-authored with Vincent Reinhart, Carmen Reinhartâs husband. I would point out that Greece, Ireland, and Portugal combined are a little over a third of Italian GDP. BM: So what does the economic recovery look like? That doesn’t imply that per capita incomes are going to go back in V-shape to what they were before. And if the U.S. government is not in, if China’s not in, it’s not really enough. If the G-20 says it’s in the global interest that debt moratoria be widely respected by all creditors for the next year, then that carries a lot of force, even in U.S. courts. (1999). The authors, husband and wife economists Vincent and Carmen Reinhart, take a close, quantitative look at the 21-year period surrounding financial â¦ I would say, looking at it now, five years would seem like a good outcome”. And I think that’s very wrong. Our son lives in this area. This Time Is Different: Eight Centuries of Financial Folly reminded readers that the catastrophic 2008-09 credit crisis was far from unique. The article was written before Reinhart was named to her World Bank post. CR: The problem in emerging markets goes beyond the poorest countries. , On May 20, 2020, Reinhart was appointed World Bank Chief Economist, starting on June 15, 2020.. It’s going to be enormously costly. But wisdom helps discern a crisis before it begins â before it metastasises through our politics, our economies and our country. That’s not a bad prediction for China. Vincent’s brother lives in this area. My husband and I worked with Carmen to sell our condo in Saline.  Her work has helped to inform the understanding of financial crises in both advanced economies and emerging markets. , She has written and published on a variety of topics in macroeconomics and international finance, including: international capital flows, capital controls, inflation and commodity prices, banking and sovereign debt crises, currency crashes, and contagion. That support its inclusion, or declines if offered how sudden this has been globalization together with technology most. The less regulated, less desirable financial institutions 2008. Realtors 2452 E Blvd... In December 2018, Reinhart received the King Juan Carlos Prize in Economics and Director of the International financial at. 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