Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015
Capital flow and commodity cycles have long been connected with economic crises. Sparse historical data, however, has made it difficult to connect their timing. We date turning points in global capital flows and commodity prices across two centuries and provide estimates from alternative data sources. We then document a strong overlap between the ebb and flow of financial capital, the commodity price super-cycle, and sovereign defaults since 1815. The results have implications for today, as many emerging markets are facing a double bust in capital inflows and commodity prices, making them vulnerable to crises.
Forthcoming in: American Economic Review Papers and Proceedings, May 2016. This paper was prepared for the American Economic Association 2016 Annual Meeting session Do Capital Flows Need to be Tamed? Presiding: Jonathan Ostry. The authors wish to thank Sergio Schmukler, Josefin Meyer, and conference participants at the ASSA Meetings for helpful comments and suggestions and Maximillian Mandl and Thorsten Roettger for excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Carmen M. Reinhart & Vincent Reinhart & Christoph Trebesch, 2016. "Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815–2015," American Economic Review, vol 106(5), pages 574-580. citation courtesy of