Global financial cycle

These few lines of Eric’s R code produce the following nice figure:

From this figure it becomes apparent that when banking crises happen, they tend to occur in many countries at once. We can see this happening in the early 1930s and in the 1980s and 1990s. (This sample ends in 2008.)

This observation has led some researchers (e.g. Hélène Rey) to argue for the existence of a global financial cycle.