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Crises in The Global Economy from Tulips to Today: Contagion and Consequences

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Author Info
Larry Neal (University of Illinois at Urbana-Champaign)
Marc D. Weidenmier (Claremont McKenna College)

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Abstract

We examine the historical record of the financial crises that have often accompanied surges of globalization in the past. The issue of contagion, the spread of financial turbulence from the crisis center to its trading partners, is confronted with historical and statistical evidence on the causes and consequences of well-known crises. Special attention is given to the gold standard period of 1880-1913, which we find useful to divide into the initial period of deflation, 1880-1896, and the following period of mild inflation, 1897-1913. We find evidence of changes in the pattern of "contagion" from core to periphery countries between the two periods, finding that apparent contagions can more readily be interpreted as responses to common shocks. Lessons for the present period can only be tentative, but the similarities in learning experiences are striking.

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Paper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 2001-32.

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Date of creation: 15 Oct 2001
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Handle: RePEc:clm:clmeco:2001-32

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Keywords: contagion; gold standard;

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  4. Goodhart, Charles & Delargy, P J R, 1998. "Financial Crises: Plus ca Change, Plus C'est La Meme Chose," International Finance, Blackwell Publishing, vol. 1(2), pages 261-87, December. [Downloadable!] (restricted)
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  6. Miller, Merton, 1998. "Asian financial crisis," Japan and the World Economy, Elsevier, vol. 10(3), pages 355-358, July. [Downloadable!] (restricted)
  7. Reuven Glick & Ramon Moreno & Mark Spiegel, 2001. "Financial crises in emerging markets," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue Mar. 23. [Downloadable!]
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    Other versions:
  19. Michael D. Bordo & Barry Eichengreen, 1993. "A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform," NBER Books, National Bureau of Economic Research, Inc, number bord93-1, April.
  20. Michael Bordo & Barry Eichengreen, 1999. "Is our Current International Economic Environment Unusually Crisis Prone?," RBA Annual Conference Volume, in: David Gruen & Luke Gower (ed.), Capital Flows and the International Financial System Reserve Bank of Australia. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2004. "Monetary Sovereignty, Exchange Rates, and Capital Controls: The Trilemma in the Interwar period," NBER Working Papers 10393, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Philip Arestis & Guglielmo Maria Caporale & Andrea Cipollini, 2003. "Testing for Financial Contagion between Developed and Emerging Markets during the 1997 East Asian Crisis," Economics Working Paper Archive 370, Levy Economics Institute, The. [Downloadable!]
    Other versions:
  3. Michael D. Bordo & Antu Panini Murshid, 2002. "Globalization and Changing Patterns in the International Transmission of Shocks in Financial Markets," NBER Working Papers 9019, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Maurice Obstfeld & Jay Shambaugh & Alan Taylor, 2004. "The Trilemma in History: Tradeoffs among Exchange Rates, Monetary Policies, and Capital Mobility," International Finance 0407003, EconWPA. [Downloadable!]
    Other versions:
  5. Graciela L. Kaminsky & Carmen Reinhart & Carlos A. Vegh, 2003. "The Unholy Trinity of Financial Contagion," NBER Working Papers 10061, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Raj Aggarwal, 2004. "Persistent Puzzles in International Finance and Economics," The Economic and Social Review, Economic and Social Studies, vol. 35(3), pages 241-250. [Downloadable!]
  7. Reinhart, Carmen & Kaminsky, Graciela & Vegh, Carlos, 2002. "Two Hundred Years of Contagion," MPRA Paper 13229, University Library of Munich, Germany. [Downloadable!]
  8. Boyer, Robert, 2004. "Japon : de la décennie perdue à un improbable New Deal," CEPREMAP Working Papers (Couverture Orange) 0404, CEPREMAP. [Downloadable!]
  9. W. -X. Zhou & D. Sornette, 2002. "Evidence of a Worldwide Stock Market Log-Periodic Anti-Bubble Since Mid-2000," Quantitative Finance Papers cond-mat/0212010, arXiv.org, revised Aug 2003. [Downloadable!]
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