AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
The Financial Center Leverage Cycle: Does It Spread around the World?
AEA Papers and Proceedings
vol. 110,
May 2020
(pp. 504–10)
Abstract
With a novel database, we examine the evolution of capital flows since the collapse of the Bretton Woods system in the early 1970s. We decompose capital flows into global, regional, and idiosyncratic factors. In contrast to previous findings, which mostly use data from the 2000s, we find that booms and busts in capital flows are mainly explained by regional factors and not the global factor. We link leverage in the financial center to regional capital flows and the cost of borrowing in international capital markets to examine the drivers of capital flow bonanzas and busts.Citation
Kaminsky, Graciela Laura, Leandro Medina, and Shiyi Wang. 2020. "The Financial Center Leverage Cycle: Does It Spread around the World?" AEA Papers and Proceedings, 110: 504–10. DOI: 10.1257/pandp.20201009Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- F21 International Investment; Long-term Capital Movements
- F32 Current Account Adjustment; Short-term Capital Movements
- G20 Financial Institutions and Services: General
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy