country database spanning the period from 1870-2010 across 69 countries. US monetary
policy tightening increases the probability of banking crises for those countries with direct
linkages to the US, either in the form of trade links or significant share of USD-denominated
liabilities. Conversely, if a country is integrated globally, rather than having a direct
exposure, the effect is ambiguous. One possible channel we identify is capital flows: If the …