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http://hdl.handle.net/10419/51498
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| Title: | | Systemic sudden stops: The relevance of balance-sheet effects and financial integration  |
| Authors: | | Calvo, Guillermo A. Izquierdo, Alejandro Mejía, Luis-Fernando |
| Issue Date: | | 2008 |
| Series/Report no.: | | Working paper // Inter-American Development Bank, Research Department 637 |
| Abstract: | | Using a sample of 110 developed and developing countries for the period 1990-2004, this paper analyzes the characteristics of systemic sudden stops (3S) in capital flows and the relevance of balance-sheet effects in the likelihood of their materialization. A small supply of tradable goods relative to their domestic absorption - a proxy for potential changes in the real exchange rate - and large foreign-exchange denominated debts towards the domestic banking system are claimed to be key determinants of the probability of 3S, producing a balancesheet effect with non-linear impacts on the probability of 3S. While financial integration is up to a point associated with a higher likelihood of 3S, beyond that point financial integration is associated with a lower likelihood of 3S. |
| Subjects: | | Balance of Payments crisis Sudden Stop capital flows dollarization real exchange rate balance sheet effects current account reversal |
| JEL: | | F31 F32 F34 F41 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Research Department Working Papers, Inter-American Development Bank
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