Leverage Cycles, Growth Shocks, and Sudden Stops in Capital Inflows

Lorenz Emter

No 06/RT/20, Research Technical Papers from Central Bank of Ireland

Abstract: Using a quarterly panel of 98 advanced as well as emerging and developing countries from 1990 to 2017, this paper shows that domestic variables are significantly related to the probability of incurring sharp reversals in capital inflows controlling for global push factors. In particular, negative growth shocks combined with high levels of leverage in the domestic private sector are a significant determinant of sudden stops. This is in line with real business cycle models including an occasionally binding credit constraint and income trend shocks.

Keywords: international capital flows; sudden stops; financial stability. (search for similar items in EconPapers)
JEL-codes: E32 F30 F32 F34 G15 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-fdg, nep-mac, nep-mon and nep-opm
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Leverage cycles, growth shocks, and sudden stops in capital inflows (2023)
Working Paper: Leverage Cycles, Growth Shocks, and Sudden Stops in Capital Inflows (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cbi:wpaper:06/rt/20

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