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The Mother of All Sudden Stops: Capital Flows and Reversals in Europe, 1919-1932

Author

Listed:
  • Eichengreen, Barry
  • Accominotti, Olivier

Abstract

We present new data documenting European capital issues in major financial centers from 1919 to 1932. Push factors (conditions in international capital markets) perform better than pull factors (conditions in the borrowing countries) in explaining the surge and reversal in capital flows. In particular, the sharp increase in stock market volatility in the major financial centers at the end of the 1920s figured importantly in the decline in foreign lending. We draw parallels with Europe today.

Suggested Citation

  • Eichengreen, Barry & Accominotti, Olivier, 2013. "The Mother of All Sudden Stops: Capital Flows and Reversals in Europe, 1919-1932," CEPR Discussion Papers 9670, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9670
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    Citations

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    Cited by:

    1. Philippe Martin & Thomas Philippon, 2017. "Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone," American Economic Review, American Economic Association, vol. 107(7), pages 1904-1937, July.
    2. George Chouliarakis & Sophia Lazaretou, 2014. "Deja vu? The Greek crisis experience, the 2010s versus the 1930s. Lessons from history," Working Papers 176, Bank of Greece.
    3. Olivier Accominotti, 2019. "International banking and transmission of the 1931 financial crisis," Economic History Review, Economic History Society, vol. 72(1), pages 260-285, February.
    4. Claudio Borio & Harold James & Hyun Song Shin, 2014. "The international monetary and financial system: a capital account historical perspective," BIS Working Papers 457, Bank for International Settlements.
    5. Schioppa, Claudio A. & Papadia, Andrea, 2015. "Foreign Debt and Secondary Markets: The Case of Interwar Germany," MPRA Paper 102863, University Library of Munich, Germany, revised 2016.
    6. Rogelio V. Mercado, 2018. "Not all surges of gross capital inflows are alike," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 45(2), pages 326-347, May.
    7. Eichengreen, Barry & Jung, Naeun & Moch, Stephen & Mody, Ashoka, 2014. "The Eurozone Crisis: Phoenix Miracle or Lost Decade?," Journal of Macroeconomics, Elsevier, vol. 39(PB), pages 288-308.
    8. Samuel Maveyraud & Antoine Parent, 2018. "The International Contagion of Short-Run Interest Rates During the Great Depression," Studies in Economic History, in: Hugh Rockoff & Isao Suto (ed.), Coping with Financial Crises, chapter 0, pages 17-46, Springer.
    9. Barry Eichengreen, 2016. "The Great Depression in a Modern Mirror," De Economist, Springer, vol. 164(1), pages 1-17, March.
    10. repec:hal:spmain:info:hdl:2441/78jqkj5bb48tgb9ah9a0kqhplu is not listed on IDEAS
    11. David M. Woodruff, 2014. "Governing by Panic: The Politics of the Eurozone Crisis," LEQS – LSE 'Europe in Question' Discussion Paper Series 81, European Institute, LSE.
    12. repec:spo:wpecon:info:hdl:2441/78jqkj5bb48tgb9ah9a0kqhplu is not listed on IDEAS
    13. Rakesh Mohan & Muneesh Kapur, 2014. "Monetary Policy Coordination and the Role of Central Banks," IMF Working Papers 2014/070, International Monetary Fund.
    14. repec:hal:wpspec:info:hdl:2441/78jqkj5bb48tgb9ah9a0kqhplu is not listed on IDEAS
    15. repec:hal:spmain:info:hdl:2441/59bp0vqv2b8k7a185vg2hert9v is not listed on IDEAS
    16. repec:spo:wpmain:info:hdl:2441/59bp0vqv2b8k7a185vg2hert9v is not listed on IDEAS
    17. Philippe Martin & Thomas Philippon, 2017. "Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone," SciencePo Working papers hal-03391984, HAL.
    18. repec:spo:wpmain:info:hdl:2441/78jqkj5bb48tgb9ah9a0kqhplu is not listed on IDEAS
    19. David M. Woodruff, 2014. "Governing by Panic: The Politics of the Eurozone Crisis," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 1, London School of Economics / European Institute.
    20. Qureshi, Mahvash S. & Sugawara, Naotaka, 2018. "Surges and reversals in capital flows," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 92-98.

    More about this item

    Keywords

    Capital flows; Europe; Great depression; Sudden stop;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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