Working Paper: NBER ID: w11634
Authors: Barry Eichengreen; Muge Adalet
Abstract: Using panel data and case studies, we analyze the pre-1970 history of international capital flows and current account reversals. Considering a sample of emerging markets and advanced economies with per capita GDPs at least 60 per cent those of the lead country, we show that the incidence of reversals has been unusually great in recent years. The only prior period that matched the last three decades in terms of the frequency and magnitude of reversals was the 1920s and 1930s, decades notorious for the instability of capital flows. In contrast, reversals were both less common and smaller in the Bretton Woods and pre-World War I gold standard eras.
Keywords: No keywords provided
JEL Codes: F31; F33; N15; N65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| current account reversals (F32) | frequency during gold standard period (N13) |
| current account reversals (F32) | frequency during interwar years (N14) |
| current account reversals (F32) | frequency during post-Bretton Woods period (F33) |
| magnitude of current account reversals (F32) | interwar years (N44) |
| magnitude of current account reversals (F32) | gold standard period (N13) |
| output losses associated with current account reversals (F32) | gold standard period (N13) |
| large current account deficits preceding reversals (F32) | output losses (D57) |
| historical context (B15) | outcomes of current account reversals (F32) |