Explain Kindleberger's Theory of Economic Cycles and International Lending

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The Answer is The cycle begins with a period of real growth with rising profits, through new technologies, transportation, or communications systems. When growth eventually outstrips productive investments, speculation begins, which is often linked to fraud and swindles. Kindleberger calls these bubble periods "mania." It involves international lending as banks exhaust domestic borrowing potential, and desperation to lend leads to high-risk foreign loans. Eventually the bubble bursts, prices fall, and a period of panic ensues when investors try to sell or collect loans, which ultimately leads to a "crash."

Explain Kindleberger's Theory of Economic Cycles and International Lending

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