Sudden Flight and True Sudden Stops

Alexander Rothenberg and Francis Warnock

No 12726, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We extend the sudden stops literature by allowing crisis episodes to be caused by either the retreat of global investors, as is assumed but not shown in the extant literature, or the sudden flight of local investors. We find that almost half of the previously defined sudden stops are actually episodes of sudden flight. Compared to sudden flight, true sudden stops are bunched and are associated with greater slowdowns in economic activity and sharper currency depreciations. We show that the empirical regularities of sudden flight and true sudden stops are consistent with theoretical models that incorporate gross capital flows and information asymmetries.

JEL-codes: F32 G15 (search for similar items in EconPapers)
Date: 2006-12
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

Published as Review of International Economics, Volume 19, Issue 3, pages 509–524, August 2011

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Related works:
Journal Article: Sudden Flight and True Sudden Stops (2011)
Working Paper: Sudden Flight and True Sudden Stops (2007)
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