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

36 Pages Posted: 6 Oct 2006

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 2006

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.

Suggested Citation

Bordo, Michael D., Sudden Stops, Financial Crises, and Original Sin in Emerging Countries: Déjà Vu? (July 2006). NBER Working Paper No. w12393. Available at SSRN: https://ssrn.com/abstract=921559

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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