Sudden stops: Determinants and output effects in the first era of globalization, 1880-1913
Michael Bordo (),
Alberto Cavallo and
Christopher Meissner ()
Journal of Development Economics, 2010, vol. 91, issue 2, pages 227-241
We study the determinants and output effects of sudden stops in capital inflows during an era of intensified globalization from 1880 to 1913. Higher levels of exposure to foreign currency debt and large current account deficits associated with reliance on foreign capital greatly increased the likelihood of experiencing a sudden stop. Trade openness and strong reserve positions had the opposite effect. Sudden stops accompanied by financial crises are associated with drops in output per capita below trend equal to three to four percent. Frictions in the international capital markets of the day are a likely candidate for these output losses. Sudden stops connected with crises do not seem to bring trend growth downwards. Sudden stops not connected with crises appear to be associated with significant declines in trend growth.
Keywords: Sudden; stops; Economic; growth; Financial; crises; Foreign; debt; Financial; globalization (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (22) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Sudden Stops: Determinants and Output Effects in the First Era of Globalization, 1880-1913 (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:eee:deveco:v:91:y:2010:i:2:p:227-241
Access Statistics for this article
Journal of Development Economics is currently edited by M. R. Rosenzweig
More articles in Journal of Development Economics from Elsevier
Series data maintained by Zhang, Lei ().