Discussion Paper Details

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Title: Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015

Author(s): Vincent Reinhart, Carmen M. Reinhart and Christoph Trebesch

Publication Date: February 2016

Keyword(s): capital flows, commodity prices, financial crises and sudden stops

Programme Area(s): Economic History, International Macroeconomics and Finance and Monetary Economics and Fluctuations

Abstract: 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.

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Bibliographic Reference

Reinhart, V, Reinhart, C and Trebesch, C. 2016. 'Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015'. London, Centre for Economic Policy Research.