The great retrenchment: international capital flows during the global financial crisis

The great trade collapse: what caused it and what does it mean?

Gian Maria Milesi-Ferretti () and Cédric Tille

Economic Policy, 2011, vol. 26, issue 66, 289-346

Abstract: The current crisis saw an unprecedented collapse in international capital flows after years of rising financial globalization. We identify the stylized facts and main drivers of this development. The retrenchment in international capital flows is a highly heterogeneous phenomenon: first, across time, being especially dramatic in the wake of the Lehman Brothers’ failure; secondly, across types of flows, with banking flows being the hardest hit due to their sensitivity of risk perception; and thirdly, across regions, with emerging economies experiencing a shorter-lived retrenchment than developed economies. Our econometric analysis shows that the magnitude of the retrenchment in capital flows across countries is linked to the extent of international financial integration, its specific nature – with countries relying on bank flows being the hardest hit – as well as domestic macroeconomic conditions and their connection to world trade flows.— Gian-Maria Milesi-Ferretti and Cédric Tille

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (397)

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1468-0327.2011.00263.x (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Great Retrenchment: International Capital Flows During the Global Financial Crisis (2011)
Working Paper: The Great Retrenchment: International Capital Flows During the Global Financial Crisis (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ecpoli:v:26:y:2011:i:66:p:289-346.

Access Statistics for this article

Economic Policy is currently edited by Ghazala Azmat, Roberto Galbiati, Isabelle Mejean and Moritz Schularick

More articles in Economic Policy from CEPR, CESifo, Sciences Po Contact information at EDIRC., CES Contact information at EDIRC., MSH Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().