Academic Papers

Acemoglu, Daron, Kenneth Rogoff, and Michael Woodford. 2008. “Exchange Rate Models Are Not as Bad as You Think: A comment.” NBER Macroeconomics Annual 2007, 443-452. Cambridge: MIT Press. NBER volume;
Reinhart, Carmen, and Kenneth Rogoff. 2008. “Is the 2007 U. S. Sub-Prime Financial Crisis So Different? An International Historical Comparison.” American Economics Review 98: 339-344. All Figures and Data Abstract

Is the 2007-2008 U.S. sub-prime mortgage financial crisis truly a new and different phenomena? Our examination of the longer historical record finds stunning qualitative and quantitative parallels to 18 earlier post-war banking crises in industrialized countries. Specifically, the run-up in U.S. equity and housing prices (which, for countries experiencing large capital inflows, stands out as the best leading indicator in the financial crisis literature) closely tracks the average of the earlier crises. Another important parallel is the inverted v-shape curve for output growth the U.S. experienced as its economy slowed in the eve of the crisis. Among other indicators, the run-up in U.S. public debt and is actually somewhat below the average of other episodes, and its pre-crisis inflation level is also lower. On the other hand, the United States current account deficit trajectory is worse than average. A critical question is whether the U.S. crisis will prove similar to the most severe industrialized-country crises, in which case growth may fall significantly below trend for an extended period. Or will it prove like one of the milder episodes, where the recovery is relatively fast? Much will depend on how large the shock to the financial system proves to be and, to a lesser extent, on the efficacy of the subsequent policy response.

Rogoff, Kenneth. 2007. “Impact of Globalization on Monetary Policy.” The New Economic Geography: Effects and Policy Implications, 265-305. Kansas City: Federal Reserve Bank of Kansas City. New Economic Geography conference
Obstfeld, Maurice, Kenneth Rogoff, and Richard Clarida. 2007. “The Unsustainable U S Current Account Position Revisited.” G7 Current Account Imbalances: Sustainability and Adjustment. Chicago: University of Chicago Press. NBER volume; Abstract

We show that when one takes into account the global equilibrium ramifications of an unwinding of the US current account deficit, currently estimated at 5.4% of GDP, the potential collapse of the dollar becomes considerably larger (more than 50% larger) than our previous estimates (Obstfeld and Rogoff 2000a). That global capital markets may have deepened (as emphasized by US Federal Reserve Chairman Alan Greenspan) does not affect significantly the extent of dollar decline in the wake of global current account adjustment. Rather, the dollar adjustment to global current account rebalancing depends more centrally on the level of goods-market integration. Whereas the dollar’s decline may be benign as in the 1980s, we argue that the current conjuncture more closely parallels the early 1970s, when the Bretton Woods system collapsed. Finally, we use our model to dispel some common misconceptions about what kinds of shifts are needed to help close the US current account imbalance. Faster growth abroad helps only if it is relatively concentrated in nontradable goods; faster productivity growth in foreign tradable goods is more likely to exacerbate the US adjustment problem.

Kose, Ayhan, Eswar Prasad, Kenneth Rogoff, Shang-Jin Wei, and Ann Harrison. 2006. “Financial Globalization, Growth and Volatility In Developing Countries.” Globalization and Poverty. Chicago: University of Chicago Press. NBER volume; Abstract

This paper provides a comprehensive assessment of empirical evidence about the impact of financial globalization on growth and volatility in developing countries. The results suggest that it is difficult to establish a robust causal relationship between financial integration and economic growth. Furthermore, there is little evidence that developing countries have been consistently successful in using financial integration to stabilize fluctuations in consumption growth. However, we do find that financial globalization can be beneficial under the right circumstances. Empirically, good institutions and quality of governance are crucial in helping developing countries derive the benefits of globalization. Similarly, macroeconomic stability appears to be an important prerequisite for ensuring that financial globalization is beneficial for developing countries. Finally, countries that employ relatively flexible exchange rate regimes and succeed in maintaining fiscal discipline are more likely to enjoy the potential growth and stabilization benefits of financial globalization.

NBER Working Paper
Rogoff, Kenneth. 2006. “Global Imbalances and Exchange Rate Adjustment.” Journal of Policy Modeling 28: 695-699. JPM Abstract

An eventual adjustment of the outsized US current account deficit is likely to have significant impact on global exchange rates unless it occurs only over a very long period. Policy responses aimed at reducing the risk of a recession are warranted, but they will not necessarily avoid the exchange rate adjustment.

Rogoff, Kenneth, Aron Gottesman, Lall Ramrattan, and Michael Szenberg. 2006. “Paul Samuelson's Contributions to Economics.” Samuelsonian Economics and the Twenty-First Century. Oxford University Press.
2006. “Keynote Address on Globalization to the United Nations General Assembly.” The Second Committee of the United Nations General Assembly. New York. UN;
Banerjee, A, A Deaton, N Lustig, and K Rogoff. 2006. An Evaluation of World Bank Research, 1998-2005. Washington, DC: World Bank. World Bank
Rogoff, Kenneth, William Brainard, and George Perry. 2005. “Global Current Account Imbalances and Exchange Rate Adjustments.” Brookings Papers on Economic Activity, 67-146.
Article Appendix
Husain, Aasim, Ashoka Mody, and Kenneth Rogoff. 2005. “Exchange Rate Regime Durability and Performance in Developing versus Advanced Economies.” Journal of Monetary Economics 52: 35-64. Abstract

Drawing on new data and advances in exchange rate regimes' classification, we find that countries appear to benefit by having increasingly flexible exchange rate systems as they become richer and more financially developed. For developing countries with little exposure to international capital markets, pegs are notable for their durability and relatively low inflation. In contrast, for advanced economies, floats are distinctly more durable and also appear to be associated with higher growth. For emerging markets, our results parallel the Baxter and Stockman classic exchange regime neutrality result, though pegs are the least durable and expose countries to higher risk of crisis.

2005. “The Euro at Five: Short-run Pain, Long-run Gain?” Journal of Policy Modeling 27 (4): 441-443. JPM; Abstract

The euro has had some marked successes over its first five years included the marked deepening of euro bond markets which has benefited the entire world. But at the same time, the pain has probably outweighed the gain as Europe still remains far from an optimal currency area.

Bulow, Jeremy, and Kenneth Rogoff. 2005. “Grants versus Loans for Development Banks.” American Economic Review 95 (2): 393–97.
Brooks, Robin J, Aasim M Husain, Ashoka Mody, Nienke Oomes, and Kenneth Rogoff. 2004. “Evolution and Performance of Exchange Rates Regimes.” International Monetary Fund Occasional Paper 229. IMF Working Paper WP03/243 Abstract

Using recent advances in the classification of exchange rate regimes, this paper finds no support for the popular bipolar view that countries will tend over time to move to the polar extremes of free float or rigid peg. Rather, intermediate regimes have shown remarkable durability. The analysis suggests that as economies mature, the value of exchange rate flexibility rises. For countries at a relatively early stage of financial development and integration, fixed or relatively rigid regimes appear to offer some anti-inflation credibility gain without compromising growth objectives. As countries develop economically and institutionally, there appear to be considerable benefits to more flexible regimes. For developed countries that are not in a currency union, relatively flexible exchange rate regimes appear to offer higher growth without any cost in credibility.

Reinhart, Carmen M, and Kenneth S Rogoff. 2004. “The Modern History of Exchange Rate Arrangements: A Reinterpretation.” Quarterly Journal of Economics 119: 1-48. Working Paper Abstract

We develop a novel system of re-classifying historical exchange rate regimes. One difference between our study and previous classification efforts is that we employ an extensive data base on market-determined parallel exchange rates. Our 'natural' classification algorithm leads to a stark reassessment of the post-war history of exchange rate arrangements. When the official categorization is a form of peg, roughly half the time our classification reveals the true underlying monetary regime to be something radically different, often a variant of a float. Conversely, when official classification is floating, our scheme routinely suggests that the reality was a form of de facto peg. Our new classification scheme points to a complete rethinking of economic performance under alternative exchange rate regimes. Indeed, the breakup of Bretton Woods had a far less dramatic impact on most exchange rate regimes than is popularly believed. Also, contrary to an influential empirical literature, our evidence suggests that exchange rate arraignments may be quite important for growth, trade and inflation. Our newly compiled monthly data set on market-determined exchange rates goes back to 1946 for 153 countries.

Ilzetzki, Ethan O, Carmen M Reinhart, and Kenneth Rogoff. 2004. “Exchange Rate Arrangements into the 21st Century: Will the Anchor Currency Hold?” Unpublished. DATA
Rogoff, Kenneth. 2004. “Some Speculation on Growth and Poverty over the Twenty-First Century.” The Brookings Trade Forum: Globalization, Growth and Poverty. Edited by Sue Collins and Carol Graham. Washington, D.C. Brookings Institution, 305-311. Brookings Trade Forum;
2004. “Extending the Limits of Global Financial Integration.” Journal of Policy Modeling 26 (4): 519-523. JPM
2004. “U S Imbalances and the Euro's Outlook.” Cato Journal 24 (1-2): 41-43. Cato Journal