From Capital Flow Bonanza to Financial Crash

Reinhart, Carmen and Reinhart, Vincent (2008): From Capital Flow Bonanza to Financial Crash. Published in: VoxEU-CEPR (August 2008): pp. 1-9.

Abstract

The standard pattern: capital flows into the new “hot” nation, but then stop or reverses forcing painful adjustment. This column presents research based on such episodes from 181 nations during 1980-2007 and for a subset of 66 nations for the 1960-2007 period. If the pattern of the past few decades holds true, emerging market economies may be facing a darkening future.

• Item Type: MPRA Paper
• English Title: From Capital Flow Bonanza to Financial Cras
• Language: English
• Keywords: international capital flows, crses procyclical polices
• Subjects: N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations

References

Calvo, Guillermo A., “Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops,” Journal of Applied Economics 1, no. 1 (1998): 35-54.

2 “Capital Flow Bonanzas: An Encompassing View of the Past and Present,” CEPR Discussion Paper 6996, October 2008.

3 The charts and tables below have been updated with the recently released IMF, World Economic Outlook (October 2008).

4 In the paper, we also consider inflation crises; for crisis definitions see Reinhart, Carmen M. and Kenneth S. Rogoff, “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises” NBER Working Paper 13882, March 2008.