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

  • Larry Neal

    (University of Illinois at Urbana-Champaign)

  • Marc D. Weidenmier

    (Claremont McKenna College)

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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  1. Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
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  12. Marc Flandreau, 1997. "Central Bank Co-operation in Historical Perspective: a Sceptical View," Sciences Po publications info:hdl:2441/648, Sciences Po.
  13. Michael D. Bordo & Anna J. Schwartz, 1994. "The Specie Standard as a Contingent Rule: Some Evidence for Core and Peripheral Countries, 1880-1990," NBER Working Papers 4860, National Bureau of Economic Research, Inc.
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  15. Neal, Larry, 2000. "How it all began: the monetary and financial architecture of Europe during the first global capital markets, 1648 1815," Financial History Review, Cambridge University Press, vol. 7(02), pages 117-140, October.
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