A common antecedent of crises across exchange-rate regimes, political systems, and budgetary situations is a 'capital flow bonanza'—running large sustained current account deficits financed by borrowing from the rest of the world, which over time makes a country increasingly indebted to the rest of the world.

causalpending

Speaker

Carmen Reinhart

Evidence Quote

it is sustained large current account deficits which means that over a period of time you are becoming increasingly indebted to the rest of the world

Source

Carmen Reinhart on Financial Crises 11/23/2009EconTalk
Created: 6/15/2026, 9:20:19 AM

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