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
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)
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