Macroeconomics
This Time Is Different
Eight Centuries of Financial Folly
1 min read
«This Time Is Different», published in 2009 by Carmen M.
Affiliate CTA preview · enabled with monetization (phase 5).
Reinhart and Rogoff analyse eight centuries of financial crises in 66 countries, reaching one conclusion: "this time is never different." Sovereign debt crises, banking collapses, hyperinflations, and currency crises always follow the same patterns, invariably preceded by the conviction that history's limits have been transcended. A monumental empirical warning against complacency.
Our review
«This Time Is Different», published in 2009 by Carmen M. Reinhart and Kenneth S. Rogoff, is the most exhaustive empirical study ever conducted on financial crises from a historical perspective. Its methodological contribution is also its greatest achievement: the authors constructed a database spanning eight centuries of sovereign debt crises, defaults, inflation, and banking crises across 66 countries, which constitutes in itself a first-rank research resource. The central conclusion is as rigorous as it is unsettling: countries and markets always believe that «this time is different» — that their particular situation justifies levels of debt or leverage unsustainable under other circumstances — and that belief is systematically wrong. Crises recur, with variations in form but not in substance. The book is dense and quantitative: it is not conceived as popular reading but as an academic reference accessible to readers with an economics background. It is worth noting that in 2013 Reinhart and Rogoff were embroiled in a controversy over a spreadsheet error in a related article; the book itself was not challenged on its central conclusions. An essential reference work for any student of financial history.
Who it's for
For economists, economic historians, and quantitatively trained readers who want to understand historical patterns of financial crises; the empirical density makes it less accessible without an economics background.
Key takeaways
- The «this time is different» syndrome — the complacent belief in one's own exceptionalism — is the most recurrent psychological and institutional factor behind every major financial crisis.
- Sovereign debt crises, banking collapses, and high-inflation episodes are not anomalies: they are recurring phenomena across all geographies and eras.
- Sovereign defaults have occurred in countries now considered «safe»: France, Germany, Spain, and the United States have all defaulted or repudiated debt at various historical moments.
- Extended periods of foreign capital inflows («bonanzas») systematically precede banking and balance-of-payments crises.
FactTo build the database for «This Time Is Different» (2009), Reinhart and Rogoff compiled financial crisis data from 66 countries spanning eight centuries, from the fourteenth century through 2009.
