Eichengreen, BarryGupta, Poonam2016-05-042016-05-042016-04https://hdl.handle.net/10986/24213The recent reversal of capital flows to emerging markets has pointed up the continuing relevance of the sudden stop problem. This paper analyzes the sudden stops in capital flows to emerging markets since 1991. It shows that the frequency and duration of sudden stops have remained largely unchanged, but that the relative importance of different factors in their incidence has changed. In particular, global factors appear to have become more important relative to country-specific characteristics and policies. Sudden stops now tend to affect different parts of the world simultaneously rather than bunching regionally. Stronger macroeconomic and financial frameworks have allowed policy makers to respond more flexibly, but these more flexible responses have not guaranteed insulation or mitigated the impact of the phenomenon. These findings suggest that the challenge of understanding and coping with capital-flow volatility is far from fully met.en-USCC BY 3.0 IGOCURRENCY MISMATCHESMONETARY POLICYDEFICITDEPOSITFOREIGN CAPITALTRADE CREDITCHECKSACCOUNTINGMONEY SUPPLIESINTERNATIONAL CAPITALPUBLIC DEBTSEQUITY FLOWSSTOCKFISCAL DEFICITSFOREIGN EXCHANGE MARKETINTERESTTRADE CREDITSMONEY SUPPLYEMERGING ECONOMIESFLEXIBLE EXCHANGE RATESINTEREST RATEOPTIONEXCHANGELIQUIDITYINTERNATIONAL FINANCIAL MARKETSCORPORATE SECURITIESPORTFOLIOBANK INTEREST RATESFISCAL POLICYBONDSMARKET INSTRUMENTSCURRENCY MISMATCHTAXDUMMY VARIABLERESERVECENTRAL BANKSINFLATIONINTERNATIONAL BANKINSTRUMENTSFINANCIAL FRAGILITYBANK LENDINGBUDGETCENTRAL BANKPOLICY RESPONSEEQUITY CAPITALFISCAL POLICIESTRADE BALANCEGLOBAL ECONOMYCURRENCYEXCHANGE RATE MOVEMENTSPOLICY RESPONSESPORTFOLIO CAPITALDEBTSEXCHANGE RATESCAPITAL ACCOUNT TRANSACTIONSOPTIONSINTEREST RATESMONETARY FUNDFLEXIBLE EXCHANGE RATECAPITAL OUTFLOWSFINANCIAL INSTITUTIONSMARKETSDEBTCAPITAL MARKETRETURNDEFICITSBUDGET DEFICITBUDGET DEFICITSINTERNATIONAL ECONOMICSSHORT-TERM CAPITALLOANSRESERVESBANK CREDITFINANCIAL SYSTEMFINANCEFOREIGN CURRENCYINTERNATIONAL FINANCIAL INSTITUTIONSTAXESBANKING SECTOREXPENDITURETRANSACTIONSEMERGING MARKETSEQUITYINVESTORSFEDERAL RESERVEFOREIGN EXCHANGE RESERVESBOND MARKETSPRIVATE SECTOR BANKRATES OF INFLATIONINTERNATIONAL INVESTMENTFINANCIAL CRISISINTERNATIONAL CAPITAL MARKETCAPITAL MOVEMENTSBUDGETSDOMESTIC BANKINGBANK BALANCE SHEETSCAPITAL FLOWSCURRENT ACCOUNT DEFICITSHARESBALANCE SHEETREAL EXCHANGE RATEMARKETLOCAL CURRENCYFOREIGN EXCHANGEMONETARY POLICIESSECURITIESPUBLIC DEBTCAPITAL INFLOWINFLATION RATESINSURANCECURRENCIESGOVERNMENT DEBTCURRENCY DEPRECIATIONFINANCIAL LIBERALIZATIONGOODSSECURITYINVESTMENTBONDDOMESTIC CREDITSHAREBALANCE SHEETSFINANCIAL MARKETSPOLITICAL STABILITYBIDCAPITAL INFLOWSREVENUEMONEY MARKETMONEY MARKET INSTRUMENTSLENDINGCONSUMER PRICE INDEXCREDIT GROWTHCAPITAL FLOWEXCHANGE RATEINSTRUMENTRISK AVERSIONPORTFOLIO FLOWSLIABILITIESOPEN ECONOMIESINTERNATIONAL INVESTORSFOREIGN EQUITYCAPITAL ACCOUNTFINANCIAL OPENNESSCREDIT LINESGUARANTEEDEVELOPMENT BANKPOLITICAL RISKWorking PaperWorld Bank10.1596/1813-9450-7639