The Trafalgar squeeze of global liquidity

by Vincent Bignon, Benoit Mojon, Miguel Ortiz Serrano<br />The severity of financial crises is exacerbated by the lack of international liquidity or the absence of a global lender of last resort. This was evident during the Long Depression (1873-1896), the Great Depression (1929-1936), and, as we show in this paper, during the 1805-1806 crisis that followed the Battle of Trafalgar. The latter took Atlantic trad…