Macroeconomics
Harvard professor Kenneth Rogoff remind you that it has sent house prices up, also can get to send them down again.
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– I remember that when I was here last time, there was still a deficit of housing. When I see construction now, it is dazzling. It is really amazing.
Harvard professor Kenneth Rogoff is back again in Oslo, pretty exactly five years since he was here last time. In the course of the few hours he has spent in the country there is construction in the capital which has made the greatest impression on the profile samfunnsøkonomen.
Wednesday is the Rogoff among the speakers at the Skagenfondenes nyttårskonferanse in Oslo.
- The american samfunnsøkonomen Kenneth Rogoff (63) is a graduate of Yale University and MIT. Today, he is among the most distinguished professors at Harvard University.
- At the beginning of the 2000s, he was chief economist of The international monetary fund IMF and he was later an adviser to The us central bank Federal Reserves New York-department.
- In 2009, he released the book “This Time is Different” together with Harvard colleague Carmen Reinhart. The book received a lot of attention because of the extensive work the authors put in the research on a large data material for the economic crises all the way back to 1810. In the book shows the authors that the consequences for financial crises the world over have very many similarities. Especially the point that a large build-up of debt, whether it applies to governments, banks, companies or households, often pose a greater risk than it appears through the financial markets are rising.
- In 1978, he was also an international grandmaster in chess and in 2012, he played a oppvisningsparti against Magnus Carlsen, which ended with a draw. – It was only a five-minute party and it is also my only party in the last 30 years, ” says Rogoff.
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– Something you should look at
From December 2015 to December 2016 increased house prices by 23 per cent in the capital. Nationwide prices were almost 13 percent higher than in December the year before.
Rogoff emphasizes that he does not have in-depth knowledge of the Norwegian housing market and that he therefore is careful not to draw any conclusions about the development.
– Much of the vulnerability depends on the regulations, ” says the professor.
Rogoff believes one of the issues clearly is how much attention the central bank should conform to the developments in the housing market.
– I see that it is aware of it and I agree that this is something that you should look at.
Indicator for financial crisis
In December pointed to Norges Bank just on the dangers that boligprisveksten and gjeldsoppbygging in the household sector poses to the financial system in Norway. Although a number of other factors, in isolation, restrictions, lower interest rates, selected central bank to keep the interest rate unchanged: “An even lower key policy rate increases the risk that the growth in house prices and debt will shoot further momentum,” wrote the executive board in its reasons for decision.
Rogoff, who in the years after the financial crisis has received much attention for the extensive research he, along with Harvard colleague Carmen Reinhart have done on the financial crises, emphasizes that there is great risk attached to such gjeldsoppbygging.
– A gjeldsdrevet boligprisboble is one of the best indicators for a financial crisis. But it is not a prophecy with 100% accuracy. Even the best indicators are weak. They clearly have a gjeldsdrevet boligprisboble in China, but they haven’t had a collapse yet, ” says Rogoff.
He reminds at the same time that the delete must not end with the financial crisis that the consequences will be severe. A fall in house prices can in themselves lead to economic decline through the effects it has on the household fortune.
Believe interest rates may rise markedly
the Explanation of the powerful boligprisveksten many places, including Norway, is located in the renteutviklingen the last few years, believes the professor. And therefore can just interest rates pose a risk for lower house prices going forward.
Rogoff shows that the choice of Donald Trump as the president of the united STATES may mark a shift in the renteutviklingen globally.
– Up to Trump was chosen falling global interest rates. Also the assessment of long-term global interest rates fell. It has been very good for assets with a long life, ” says Rogoff.
– It is not surprising that house prices are rising everywhere as a reflection of it. And it is something that is a vulnerability. I actually think that interest rates may rise markedly over the next few years. Not least in the USA they will do that, and put pressure on global interest rates, ” says Rogoff.
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