Sudden Flight and True Sudden Stops / Alexander D. Rothenberg, Francis E. Warnock.

Format:

Book

Author/Creator:

Rothenberg, Alexander D.

Contributor:

National Bureau of Economic Research.

Warnock, Francis E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12726.

NBER working paper series no. w12726

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

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.

Notes:

Print version record

December 2006.