Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51498
Authors: 
Calvo, Guillermo A.
Izquierdo, Alejandro
Mejía, Luis-Fernando
Year of Publication: 
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

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