Discussion of Qian, Reinhart, and Rogoff’s “On Graduation from Default, Inflation and Banking Crises: Ellusive or Illusion”

Qian et al. (2010) (henceforth QRR) have assembled an impressively rich data set on external default, banking, and monetary crises. This paper is part of an ambitious project on placing crises in the proper historical perspective (e.g., Reinhart and Rogoff, 2009). It is an extremely valuable research agenda, as much of modern sovereign debt literature has focused on recent (post 1980) episodes, which give only a partial and potentially misleading view. One way the post-1980 perspective is misleading is that rich countries were relatively immune from many of the crises that plagued emerging markets, with the only exception being banking crises. However, as we learn from QRR, rich countries had more than their share of crises historically, raising the question of how a country graduates into the “stability club”. This is the focus of QRR.