Having warned in Davos today that:

“If interest rates go up even modestly, halfway to their normal level, you will see a collapse in the stock market,”

“I don’t know how everything from art and bitcoin to stock prices will react as interest rates go up.”

Kenneth Rogoff, Professor of Public Policy at Harvard University, explains to Finanz Und Wirtschaft’s Christoph Gisiger why the long economic slump is finally over and what the biggest risks for the future are.

Few people know as much about financial crises as Kenneth Rogoff. Together with his colleague Carmen Reinhart, the highly influential professor at Harvard University is the author of «This Time Is Different: Eight Centuries of Financial Folly», one of the most important studies on the financial crisis of 2008 and its impact on the economy and society. So what’s the big lesson nearly ten years after the traumatic fall of the investment bank Lehman Brothers? In which way was this crisis different than other big shocks in the history of finance? Und most importantly: What’s next for the global economy?

Professor Rogoff, since the outbreak of the financial crisis nearly ten years have passed. How do grade this recovery when you look at other big busts in the history of finance?
In my research with Carmen Reinhart we found that after a deep systemic financial crisis, it often takes the economy eight to ten years to recover. Now, it’s been a decade and I think we are in a recovery period where we are going to get some reversion to mean in terms of productivity growth and other things. That means we are going to get above average productivity growth and rising investments for several years as the economy normalizes.

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