Financial center leverage drives global capital flow booms and busts.
The article examines how capital flows have changed since the 1970s, focusing on global, regional, and individual factors. Contrary to previous studies, the researchers found that regional factors, not global ones, drive booms and busts in capital flows. They also discovered a connection between financial center leverage, regional capital flows, and borrowing costs in international markets, shedding light on what causes capital flow fluctuations.