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American Economic Review Vol. 106 No. 5 2016

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

Carmen Reinhart1; Vincent Reinhart2; Christoph Trebesch3

1 Kennedy School of Government, Harvard University, 79 JFK Street, Cambridge, MA 02138 (e-mail: ) · 2 American Enterprise Institute, 1150 17th Street, Washington, DC 20036 (e-mail: ) · 3 University of Munich, Schackstr. 4, 80539 Munich, Germany (e-mail: )

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.

DOI
10.1257/aer.p20161014
Volume
106
Issue
5
Pages
574-580
Language
en
Sources
bibtex:phds-export.bib crossref openalex

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