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Sudden Stops, Financial Crises, and Original Sin in Emerging Countries: Déjà vu?

Michael Bordo ()

No 12393, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The current pattern of sudden stops and financial crises in emerging markets has great resonance to events in the first era of globalization, from 1870-1913. In this paper I present descriptive statistics on capital flows, current account reversals and financial crises during the period 1870-1913 and compare them with the recent experience. I analyze the incidence of crises and measure their effects on real output losses. Furthermore, I consider the influence of openness to trade, original sin and currency mismatches on the pattern of sudden stops and financial crises. I find strikingly similar patterns across both eras of globalization. The pre-1914 sudden stops were associated with significant output losses comparable with the recent events, and their effects differed considerably depending on a country%u2019s economic circumstances, just as they do today.

JEL-codes: E44 F32 N1 N20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-fmk, nep-his and nep-mac
Date: 2006-07
Note: DAE IFM ME
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