Calderón, CésarKubota, Megumi2012-03-192012-03-192011-02-01https://hdl.handle.net/10986/3336The main goal of this paper is to characterize the determinants of sudden stops caused by domestic vis-a-vis foreign residents. Are the decisions of domestic investors to invest abroad or of foreign investors to cut off funds from the domestic economy governed by the same set of determinants? Given the distribution of different types of sudden stop episodes over time and its different macroeconomic consequences, the authors argue that the determinants may not be alike. Using an effective sample of 82 countries with annual information over the period 1970-2007, the analysis finds that global investors are less likely to stop bringing their capital when their economy is growing and the world interest rate is lower. Domestic agents are more willing to invest abroad if the macroeconomic performance of the domestic economy is poor (high inflation), the financial system is weak, and there are high external savings (current account surpluses). Increasing financial openness makes the domestic country more vulnerable to sudden stops caused by either local or global investors. Finally, countries with higher shares of foreign direct investment are less prone to inflow-driven sudden stops, whereas the opposite holds for outflow-driven sudden stops.CC BY 3.0 IGOADVANCED COUNTRIESBALANCE OF PAYMENTSBANK ASSETSBANK CREDITBANK DEPOSITBANK DEPOSITSBANK POLICYBANKING CRISESBANKING CRISISBANKING SYSTEMBOND MARKETBOND MARKET CAPITALIZATIONBOND MARKETSBONDSBUDGET SURPLUSBUSINESS CYCLESCAPITAL ACCOUNTCAPITAL ACCOUNT LIBERALIZATIONCAPITAL CONTROLSCAPITAL FLIGHTCAPITAL FLOWCAPITAL FLOWSCAPITAL GROWTHCAPITAL INFLOWSCAPITAL MARKETCAPITAL MARKET REFORMCAPITAL MARKETSCAPITAL OUTFLOWSCAPITAL STOCKCENTRAL BANKCOMMUNICATION TECHNOLOGYCONSUMER PRICE INDEXCORPORATE GOVERNANCECREDIT CONSTRAINTSCREDIT GROWTHCURRENCYCURRENCY CRISESCURRENCY CRISISCURRENCY MISMATCHESCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITSCURRENT ACCOUNT SURPLUSESDATA AVAILABILITYDEBTDEBT BURDENDEBT FINANCINGDEBT FLOWSDEPOSITDERIVATIVESDEVELOPING COUNTRIESDOMESTIC CREDITDOMESTIC CURRENCYDOMESTIC ECONOMYDOMESTIC FINANCIAL MARKETSDOMESTIC INVESTORSECONOMIC PERFORMANCEEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKETSEQUITY FLOWSEQUITY MARKETSEXCHANGE RATE REGIMEEXCHANGE RATE REGIMESEXPORT BASEEXPOSUREEXTERNAL ASSETSEXTERNAL FINANCEEXTERNAL FINANCINGFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL DERIVATIVESFINANCIAL DEVELOPMENTFINANCIAL FLOWSFINANCIAL INFLOWSFINANCIAL INFRASTRUCTUREFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL OPENNESSFINANCIAL SECTORFINANCIAL SECTOR INDICATORSFINANCIAL SECTORSFINANCIAL SERVICESFINANCIAL SHOCKSFINANCIAL SYSTEMFISCAL DEFICITSFISCAL POLICIESFISCAL POLICYFLEXIBLE EXCHANGE RATEFLOWS OF CAPITALFOREIGN ASSETSFOREIGN BANKFOREIGN CAPITALFOREIGN DIRECT INVESTMENTFOREIGN EQUITIESFOREIGN FINANCINGFOREIGN INTERESTFOREIGN INVESTORSFOREIGN PORTFOLIOFOREIGN PORTFOLIO INVESTMENTGLOBAL CAPITALGLOBAL CAPITAL FLOWSGLOBAL ECONOMYGLOBAL INVESTORSGLOBALIZATIONGOVERNMENT BUDGETGOVERNMENT EXPENDITUREGROWTH RATEGROWTH RATESHIGH INFLATIONINCOMEINCOME LEVELSINDEBTED COUNTRIESINDUSTRIAL COUNTRIESINFLATIONINFLATION RATEINFORMATION ASYMMETRIESINFRASTRUCTURE PROJECTSINSURANCEINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BORROWINGINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL CREDITINTERNATIONAL ECONOMICSINTERNATIONAL ECONOMIESINTERNATIONAL FINANCIAL INTEGRATIONINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL FINANCIAL STATISTICSINTERNATIONAL INVESTMENTSINTERNATIONAL MARKETSINTERNATIONAL RESERVESINVESTMENT CLIMATEINVESTMENT FLOWSLIABILITYLIQUID ASSETSLIQUIDITYLOCAL CAPITAL MARKETSLOCAL FINANCIAL MARKETSLOCAL INVESTORSMACROECONOMIC MISMANAGEMENTMACROECONOMIC PERFORMANCEMACROECONOMIC POLICIESMACROECONOMIC POLICYMACROECONOMIC STABILITYMACROECONOMIC VULNERABILITYMICRO DATAMIDDLE-INCOME COUNTRIESMONETARY FUNDMONETARY POLICYMONETARY STABILITYMONEY MARKETMONEY MARKET RATENATURAL RESOURCENATURAL RESOURCESNET CAPITALNET DEBTNON-PERFORMING LOANSOUTPUTPOLICY RESPONSESPORTFOLIOPORTFOLIO INFLOWSPORTFOLIO INVESTMENTPORTFOLIOSPOSITIVE COEFFICIENTPRICE STABILITYPRIVATE BONDPRIVATE CAPITALPRIVATE CAPITAL INFLOWSPRIVATE CREDITPRIVATE SECTOR FINANCEPUSH FACTORSRATE OF GROWTHREAL ECONOMIC ACTIVITYREAL EXCHANGE RATEREAL EXCHANGE RATESREAL INTERESTREAL INTEREST RATEREGULATORY CAPITALREGULATORY FRAMEWORKSRESERVERESERVE ACCUMULATIONRESERVESRETURNRETURNSRISK AVERSIONSAVINGSSECURITIESSMALL COUNTRIESSTOCK MARKETSTOCK MARKET CAPITALIZATIONSTOCKST-BILLSTAXTAX SYSTEMSTRADE BALANCETRADINGTREASURYTREASURY BILLSVOLATILITYWORLD DEVELOPMENT INDICATORSWORLD INTEREST RATEWORLD MARKETWorld Bank10.1596/1813-9450-5569