Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015

15 Pages Posted: 8 Mar 2016

See all articles by Carmen Reinhart

Carmen Reinhart

Harvard University

Vincent R. Reinhart

American Enterprise Institute (AEI)

Christoph Trebesch

Kiel Institute for the World Economy; Centre for Economic Policy Research (CEPR)

Date Written: January 13, 2016

Abstract

Capital flow and commodity cycles have long been connected with economic crises. Sparse historical data, however, has made it difficult to connect their timing. We date turning points in global capital flows and commodity prices across two centuries and provide estimates from alternative data sources. We then document a strong overlap between the ebb and flow of financial capital, the commodity price super-cycle, and sovereign defaults since 1815. The results have implications for today, as many emerging markets are facing a double bust in capital inflows and commodity prices, making them vulnerable to crises.

Keywords: commodity prices, capital flows, financial crises, sudden stops

JEL Classification: E300, E440, F440, F600, G010, N100, N200

Suggested Citation

Reinhart, Carmen and Reinhart, Vincent R. and Trebesch, Christoph, Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015 (January 13, 2016). CESifo Working Paper Series No. 5737. Available at SSRN: https://ssrn.com/abstract=2744551

Carmen Reinhart

Harvard University ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Vincent R. Reinhart

American Enterprise Institute (AEI) ( email )

1150 17th Street, N.W.
Washington, DC 20036
United States

Christoph Trebesch (Contact Author)

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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