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Nobel Laureate Shiller Says Default on U.S. Debt Unlikely

Robert J. Shiller, who shares the 2013 Nobel Prize in Economic Sciences, said he doesn’t expect the U.S. government to default on its debt and doesn’t foresee any long-term market consequences from the current impact over raising the nation’s borrowing limit.

“I’m thinking probably nothing big is going to happen,” Shiller said at a press conference at Yale University, where he is a professor of economics. “It should be OK. We still have in this country a sense of cooperation that will emerge and prevent a default.”

Shiller, who shares the 2013 prize with University of Chicago economists Eugene Fama and Lars Peter Hansen, said “this crisis will likely be resolved. We won’t see a default. Even if we do it will be for one day or something and even if it’s longer, it’s not the end of the world.”

Any resulting plunge in markets would most likely be temporary, Shiller said. Recalling the market reaction after a similar crisis in 2011, he said, “the market may drop 7 percent in one day and come back up.”

To contact the reporter on this story: Mark Rohner in Washington at mrohner@bloomberg.net

To contact the editor responsible for this story: Gail DeGeorge at gdegeorge@bloomberg.net

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