NBER

Muge Adalet

School of Economics and Finance
Victoria University of Wellington
Wellington, New Zealand

E-Mail: muge.adalet@vuw.ac.nz
Institutional Affiliation: Victoria University, Wellington

NBER Working Papers and Publications

May 2007Current Account Reversals: Always a Problem?
with Barry Eichengreen
in G7 Current Account Imbalances: Sustainability and Adjustment, Richard H. Clarida, editor
September 2005Current Account Reversals: Always a Problem?
with Barry Eichengreen: w11634
Using panel data and case studies, we analyze the pre-1970 history of international capital flows and current account reversals. Considering a sample of emerging markets and advanced economies with per capita GDPs at least 60 per cent those of the lead country, we show that the incidence of reversals has been unusually great in recent years. The only prior period that matched the last three decades in terms of the frequency and magnitude of reversals was the 1920s and 1930s, decades notorious for the instability of capital flows. In contrast, reversals were both less common and smaller in the Bretton Woods and pre-World War I gold standard eras.

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