Moritz Schularick is a Fellow at the Institute for New Economic Thinking (INET) and professor of economics at the University of Bonn. He was previously a professor at the John F. Kennedy Institute of the Free University of Berlin, Germany, a visiting scholar at Cambridge University, and worked in the financial industry for several years. His current work focuses on credit cycles, the determinants of financial crises, and the international monetary system. Together with Niall Ferguson, he coined the term “Chimerica” to describe the intimate financial relations between the United States and China. Working at the crossroads of monetary and international economics as well as economic history, his contributions can be found in the American Economic Review, the Quarterly Journal of Economics, the Journal of Monetary Economics, the Journal of International Economics, the Journal of Economic History, and several other journals.
- Leader of Private Debt
- Leader of Finance and the Welfare of Nations: The View from Economic History
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In the aftermath of the global financial crisis, few would dispute the risks of excessive borrowing. But which debts should one worry about – public or private? This column presents new research on the interplay of public and private debts since 1870 in 17 advanced economies. History demonstrates that excessive private-sector borrowing plays a greater role than fiscal profligacy in generating financial instability. However, when the credit boom collapses, the government’s capacity to alleviate the downturn is limited by the prevailing level of public debt.
This paper tracks the development of sectoral saving and borrowing in the US economy over the past 50 years.
Taking a long‐run view from economic history, I make three points about instability in financial markets. First, I argue that economic historians have a relatively good understanding of the proximate causes of financial crises.
Featuring this expert
Carmen Reinhart and Kenneth Rogoff tell the history of financial crisis as a tale of excessive public debt. But what more commonly drives financial instability, says Moritz Schularick, is excessive private debt.