Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

another information related to today's conversation. Our email address is mailadicontalk.org. We'd

love to hear from you. Today is November 9th and my guest is Carmen Reinhardt, Professor of

Economics at the University of Maryland, and the author with Kevin Throgoff of this time is

different, eight centuries of financial folly. Carmen, welcome to Econ Talk. Thank you, thank you for

having me. I want to start by talking about the book, which is a wonderful and ambitious research

project, and then we'll turn to the current crisis. What's the goal of the project, and can you

summarize the main takeaways? Well, we really wanted to provide an analysis of crises that looked

for recurring patterns in a quantitative way. I mean, there a big inspiration is Kindleburgers,

famous classic book on financial crises, but that is, and they ring true to nature each narrative,

but they are narrative. What we wanted to do was actually go out and quantify it. What are the

cycles that lead up to these big blowouts? Do countries start to borrow and live beyond their

means? Do their asset markets develop bubbles? Do their consumers either saving rates plummet?

All those recurring features were the kinds of things we were after to try and quantify.

You look at a wide range of different type of crises. Why don't you give a brief summary of the

range of stuff you look at, and then you try to categorize what they have in common within each

category, right? That's right. Crisis come in different varieties. We have the kind that we just saw

in the United States, the UK, we have financial or in the old days before when we just had banks

called banking crises. We have banking crises. We have currency crashes, so that collapses

in the foreign exchange market are also important crises. For example, Asia 1997, 1998,

...