Working Paper: CEPR ID: DP13465
Authors: Rui Esteves; Barry Eichengreen
Abstract: In this paper we survey the history of international finance spanning a century and a half. We start by characterizing capital flows in the long run, organizing our discussion around six facts relating to the volume and volatility of capital flows, measured in both net and gross terms. We then connect up the discussion with exchange rates and monetary policies. The organizing framework for this section is the macroeconomic trilemma. We describe where countries situated themselves relative to the trilemma over time and consider the political economy of their choices. Finally, we study the connections between international finance and economic and financial stability. We present consistent measures of growth and debt crises over the century and a half covered in this paper and discuss how their incidence is related to those institutional and political circumstances and, more generally, to the nature of the international monetary and financial regime.
Keywords: Capital Flows; Monetary Systems; Financial Crises
JEL Codes: F21; F33; F34; N10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| international capital flows (F32) | economic stability (E63) |
| capital mobility (F20) | financial crises (G01) |
| increased capital flow volatility (F32) | financial crises (G01) |
| historical patterns of capital flows (F32) | economic stability (E63) |
| capital flows (F32) | financial instability (F65) |