Surges and Sudden Stops of Capital Flows to Emerging Markets

Ozan Sula

MPRA Paper from University Library of Munich, Germany

Abstract: A characteristic of many of the recent emerging market currency crises is a preceding surge in capital inflows and their reversals or ‘sudden stops’ during the crises. The empirical investigation of 38 emerging market economies between 1990 and 2003 reveals that a surge in capital inflows significantly increases the probability of a sudden stop. In addition, a surge accompanied by a high current account deficit or an appreciated real exchange rate is more likely to be associated with a sudden stop. The paper also finds that a surge that is dominated by private loans and portfolio flows rather than direct investment has a higher probability to end with a sudden stop.

Keywords: Capital flows; Sudden stops; Surges in capital flows; Emerging Markets; private loans; portfolio flows; foreign direct investment (search for similar items in EconPapers)
JEL-codes: F32 F41 (search for similar items in EconPapers)
Date: 2006-01
New Economics Papers: this item is included in nep-cba
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Surges and Sudden Stops of Capital Flows to Emerging Markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:383

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