Medium-Term Cycles and Financial Crises in Semi-periphery Countries
Authors:
Peeters, B.; Defraigne, J.-C.
Abstract:
This study assesses the existence of a pattern of balance-of-payment financial crises (BOP crises) to semi-periphery economies driven by large medium-term cycles in center countries. Based on the concepts of medium-term cycles and center-periphery, we first introduce the Center Leader economies’Industrial-Financial cycles (CLIF cycles). We then explain how these CLIF cycles trigger large countercyclical financial inflows in semi-periphery countries that subsequently create BOP crises. This enables us to account for (i) a periodic pattern characterizing international financial flows between center and semi-periphery economies since the 1970s, and (ii) how this pattern is at the root of the BOP crises in semi-periphery countries. We propose a historical review of the crises in semi-periphery countries since the 1970s. This highlights that the last three major waves of BOP crises in the semi-periphery (during the 1980s, 1994-2001, and 2008-2019) are each linked with an upward and downward phase of the CLIF cycles.
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