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Thomas Herndon - Loyola Marymount University. Los Angeles, CA, US

Thomas Herndon Thomas Herndon

Assistant Professor of Economics | Loyola Marymount University


Bellarmine College of Liberal Arts


Professor Thomas Herndon earned his B.A. in Economics from the Evergreen State College in 2007, and his Ph.D. in Economics in 2016 from the University of Massachusetts, Amherst. His research spans the fields of Macroeconomics, Political Economy, Econometrics, and Money and Banking. This research uses empirical and historical methods to analyze the macroeconomic and political economic questions of distribution, instability, and growth within the framework of the economy’s interlocking balance sheets. His research has garnered attention by contributing to debates within economics and policy-making circles. His research has appeared in the New York Times, Wall Street Journal, BBC, The Economist, Rolling Stone, and the Colbert Report. In 2013, he was selected for the awards, “Bostonian of the Year Honorable Mention,” from the Boston Globe, and “Leading 100 Global Thinkers,” from Foreign Policy.

Education (2)

University of Massachusetts, Amherst: Ph.D., Economics 2016

The Evergreen State College: B.A., Economics 2007


Areas of Expertise (4)


Political Economy



Accomplishments (7)

Most Valuable Professor (professional)

Baseball Team, Loyola Marymount University, 2018

Teacher of the Year Award (professional)

Economics Department, Loyola Marymount University, 2017

Citation of Excellence (professional)

Emerald Publishing, 2017

John Kenneth Galbraith Prize for Dissertation Research (professional)

Department of Economics, University of Massachusetts Amherst, 2014

Leading 100 Global Thinkers (professional)

Foreign Policy, 2013

Albert O. Hirschmann “Albie” Award for Best Writing in Global Political Economy (professional)

Foreign Policy, 2013

Bostonian of the Year Honorable Mention (personal)


Boston Globe, 2013

Media Appearances (2)

Austerity's Spreadsheet Errors

The Colbert Report  tv


Carmen Reinhart and Kenneth Rogoff's 2010 debt study inspires austerity around the world, but grad student Thomas Herndon debunks the results.

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Austerity's Spreadsheet Errors -Thomas Herndon

The Colbert Report  tv


Graduate student Thomas Herndon identifies little staggering omissions in a prominent academic paper, "Growth in a Time of Debt."

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Event Appearances (12)

The Distribution of Risk and the Great Recession: Old Problems, New Crises

Tipping Points III: Debt Financed Homeownership: It's Evolution, Impact, and Future  Policy Research Symposium, Washington DC, October 2018

A Public Banking Option as a Mode of Regulation for Household Financial Services in the United States

Union for Radical Political Economics 50th Anniversary Conference and Celebration  University of Massachusetts, September 2018

Mortgage Fraud and the Great Recession

Economic Justice Speaker Series  Department of Economics, John Jay School of Criminal Justice CUNY, March 2018

Punishment or Forgiveness? Loan Modifications in Private Label Residential Mortgage Backed Securities from 2008-2014

Macroeconomics Seminar  New School for Social Research Department of Economics, March 2018

Expert Panelist

Teach-in with Congressman Mark Takano  Irvine, California, February 2018

Expert Panelist

Community Meeting Regarding the 2017 Federal Tax Bill with Congresswoman Maxine Waters  Westchester, California, January 2018

A Public Banking Option in the United States

Post-Crisis Economic Strains and Policy in Europe and the US  Association for Social Economics at the American Economic Association Annual Conference, Philadelphia , Pennsylvania, January 2018

Expert Discussant for Tax Reform Panel

Town Hall Meeting with Congresswoman Maxine Waters, December 2017  Los Angeles Harbor College

Punishment or Forgiveness? Loan Modifications in Private Label Residential Mortgage Backed Securities from 2008-2014

Economics Seminar Series  Loyola Marymount University, November 2017

Punishment or Forgiveness? Loan Modifications in Private Label Residential Mortgage Backed Securities from 2008-2014

Bellarmine College of Liberal Arts Faculty Research Symposium  Loyola Marymount University, November 2017

When Economics Goes Viral

Keynote Speaker, Festival for New Economic Thinking  Edinburgh, Scotland, October 2017

Mortgage Fraud, Liar's Loans, and the Great Recession

Invited Talk for Department of Economics  University of Missouri, Kansas City, April 2017

Courses (2)

Econ 3200

Intermediate Macroeconomics

Econ 5320

Advanced Econometrics

Articles (4)

"Punishment or Forgiveness? Loan Modifications in Private Label Residential Mortgage Backed Securities from 2008-2014 PERI: University of Massachusetts Amherst

Thomas Herndon


I estimate the extent to which modifications of privately securitized mortgages increased or forgave debt during the Great Recession and aftermath, from 2008-2014. I find that loan modifications weakened household balance sheets by adding $20 billion to household debt, with the net amount of debt added per modification doubling from 2010-2014. Using a decomposition analysis, I also find that the increase in debt is consistent with capitalization of fees. Capitalization of fees is significant because it has been associated with a principal-agent problem between investors and mortgage servicers which prevented efficient loss mitigation, as well as consumer financial protection abuses.

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Liar's Loans, Mortgage Fraud, and the Great Recession Political Economy Research Institute


Losses in the market for private label residential mortgage backed securities (RMBS) were at the epicenter of the financial crisis from 2007-2009. Existing research has shown that a substantial portion of the poor performance of the loans securitized in this market was caused by fraudulent origination practices, and that these practices were misrepresented to investors who purchased securities based on these loans. However, to date no paper has estimated the effects of mortgage fraud on losses from foreclosure in this market. This paper fills this gap by 1) Accounting for total losses from foreclosure due to no/low documentation loans which were known colloquially within the industry as Liar's Loans, and 2) Estimating what portion of these losses can be considered excess from the perspective of the investor. Losses are considered excess in the sense that they were higher than the expected losses for investors, had the loan quality information disclosed to th em been accurate, instead of fraudulent. I find that Liar's Loans account for roughly 70% of total losses, and 36% of losses in Liar's Loans can be considered excess. Projected to the level of the entire market, this implies that $345 billion of the $500 billion in losses from foreclosure are accounted for by Liar's Loans. Roughly $125 billion, or 25% of total market losses, can be considered excess losses caused by fraud in Liar's Loans

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The Revenue Potential of a Financial Transactions Tax for U.S. Financial Markets. Political Economy Research Institute


This paper estimates the revenue potential of a financial transaction tax (FTT) for U.S. financial markets. We focus on analyzing the revenue potential of the Inclusive Prosperity Act that was introduced in the U.S. House of Representatives in 2012 and the U.S. Senate in 2015. The tax rates stipulated in this Act include 0.5 percent (50 basis points) for all stock transactions; 0.1 percent (10 basis points) for all bond transactions; and 0.005 percent (0.5 basis points) on the notional value of all derivative trades. We examine three sets of evidence to generate potential revenue estimates: 1) the levels of transaction costs in U.S. financial markets over time and within the range of financial market segments; 2) the extent of trading elasticities under various trading conditions; and 3) the current level of trading activity in U.S. financial markets. Based on this evidence, we conclude that a US FTT operating at the tax rates stated above would generate about $250 billion pe r year, assuming that a combination of trading volume decline and tax avoidance generates the equivalent of a 50 percent fall in trading revenue. We then consider additional factors whose impact will reduce the net revenue generated by the Act. Adding up these various considerations, we conclude conservatively that the net revenue potential of this U.S. FTT is around $220 billion per year, which equals approximately 1.2 percent of current U.S. GDP. This revenue estimate as a share of GDP is consistent with experiences in other countries that have operated with FTTs with similar tax rates and other design features. It is also consistent with other projections based on tax rates that are comparable to those we are examining. In addition, we examine the 18-fold increase, between the 1970s and the present, in the ratio of stock market trading relative to productive investment spending by U.S. nonfinancial corporations. This sharp rise in stock market trading as a share of productive investments has not been associated with any growth in productive investments themselves. Working from this evidence, we conclude that a U.S. FTT, which should bring a fall in stock market trading relative to productive investment spending, should not, on balance, produce significant negative effects on productive investments.

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Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff Political Economy Research Institute


Herndon, Ash and Pollin replicate Reinhart and Rogoff and find that coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth among 20 advanced economies in the post-war period. They find that when properly calculated, the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0:1 percent as published in Reinhart and Rogoff. That is, contrary to RR, average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.

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