Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015
Carmen M. Reinhart, Vincent Reinhart, Christoph Trebesch
American Economic Review · 2016 · Volume 106 · Issue 5
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.
Keywords
Business Fluctuations, Cycles, International Investment, Long-Term Capital Movements, Current Account Adjustment, Short-Term Capital Movements, International Business Cycles, Economic History: Financial Markets and Institutions: General, International, or Comparative, Commodity Markets
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