International Capital Flows and Sudden Stops:
A domestic or a global issue?
Momchil Petkov
Excellent Dissertation Prize,
MSc Development Studies (2014)
Abstract
This paper analyses the determinants of sudden stops in capital inflows in developing and developed countries. It aims to reconcile the differences in the new literature which finds that global factors are the key determinants of sudden stops and the earlier literature which finds that domestic factors are key drivers of such episodes. It introduces explanatory variables to the regression analysis used in the new literature such as liability dollarization and trade openness, which have been found as significant in previous studies. The results provide new evidence for the hypothesis that global factors are the key drivers of sudden stops.
Keywords
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Capital inflows
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Sudden stops
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Trade openness
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Inflation
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