Clausen Center Director and Professor
Department of Economics and Economic Analysis and Policy Group, Haas School of Business
Pierre Olivier Gourinchas is professor in the Economics department and Haas School of Business at the University of California, Berkeley, and faculty director of the Clausen Center for International Business and Policy. He is a member of the French Council of Economic Advisors, and Editor-in-Chief of the IMF Economic Review, Research Fellow at the Center for Economic Policy Research, and Research Associate at the National Bureau of Economic Research (Cambridge, Massachusetts). His main research interests are in international macroeconomics and finance. His recent research focuses on the importance of the valuation channel for the dynamics of external adjustment and the determination of exchange rates; the determinants of capital flows to and from developing countries; on international portfolios; global imbalances; international price discrimination; and the global financial crisis.
Summary of recent papers:
Date: June 2016
Coauthors: Thomas Philippon, Dimitri Vayanos
Citation: NBER Macroeconomics Annual 2016, Volume 31, forthcoming.
We provide an empirical and theoretical analysis of the Greek Crisis of 2010. We first benchmark the crisis against all episodes of sudden stops, sovereign debt crises, and lending boom/busts in emerging and advanced economies since 1980. The decline in Greece’s output, especially investment, is deeper and more persistent than in almost any crisis on record over that period. We then propose a stylized macro-finance model to understand what happened. We find that a severe macroeconomic adjustment was inevitable given the size of the fiscal imbalance; yet a sizable share of the crisis was also the consequence of the sudden stop that started in late 2009. Our model suggests that the size of the initial macro/financial imbalances can account for much of the depth of the crisis. When we simulate an emerging market sudden stop with initial debt levels (government, private, and external) of an advanced economy, we obtain a Greek crisis. Finally, in recent years, the lack of recovery appears driven by elevated levels of non-performing loans and strong price rigidities in product markets.
Date: March 2016
Coauthors: Ricardo J. Caballero, Emmanuel Farhi
Citation: Working Paper
This paper explores the consequences of extremely low equilibrium real interest rates in a world with integrated but heterogenous capital markets, and nominal rigidities. In this context, we establish six main results: (i) Economies experiencing liquidity traps pull others into a similar situation by running current account surpluses; (ii) Reserve currencies have a tendency to bear a disproportionate share of the global liquidity trap--a phenomenon we dub the \reserve currency paradox;" (iii) Beggar-thy-neighbor exchange rate devaluations stimulate the domestic domestic economy at the expense of other economies; (iv) While more price and wage flexibility exacerbates the risk of a deflationary global liquidity trap, it is the more rigid economies that bear the brunt of the recession; (v) (Safe) Public debt issuances and increases in government spending anywhere are expansionary everywhere, and more so when there is some degree of price or wage flexibility. We use our model to shed light on the evolution of global imbalances, interest rates, and exchange rates since the beginning of the global financial crisis.