Credit Booms in Commodity Exporters

This paper identifies 101 credit boom episodes, i.e. periods of exceptional credit growth, in a sample of 115 countries for 1960-2014, and compares the results for commodity exporters and non-commodity exporters. I find that there is no difference in the number and duration of credit booms between commodity exporters and non-commodity exporters, but around two thirds of credit booms in the last four decades in commodity exporters have been associated with high commodity prices. In addition, I find that business cycles dynamics are more exacerbated during a credit boom episode in commodity exporters than in non-commodity exporters, and domestic demand variables tend to end below the trend after the peak of a credit boom. A frequency analysis shows that commodity exporters have a higher likelihood of having credit booms ending in a banking crisis and this result is confirmed by a regression analysis. However, commodity exporters do not have a higher incidence of having a credit boom, and net capital inflows and credit growth remain as the main predictors of these episodes.