Managing Sudden Stops

The 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 durat...

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Main Authors:	Eichengreen, Barry, Gupta, Poonam
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	CURRENCY MISMATCHES MONETARY POLICY DEFICIT DEPOSIT FOREIGN CAPITAL TRADE CREDIT CHECKS ACCOUNTING MONEY SUPPLIES INTERNATIONAL CAPITAL PUBLIC DEBTS EQUITY FLOWS STOCK FISCAL DEFICITS FOREIGN EXCHANGE MARKET INTEREST TRADE CREDITS MONEY SUPPLY EMERGING ECONOMIES FLEXIBLE EXCHANGE RATES INTEREST RATE OPTION EXCHANGE LIQUIDITY INTERNATIONAL FINANCIAL MARKETS CORPORATE SECURITIES PORTFOLIO BANK INTEREST RATES FISCAL POLICY BONDS MARKET INSTRUMENTS CURRENCY MISMATCH TAX DUMMY VARIABLE RESERVE CENTRAL BANKS INFLATION INTERNATIONAL BANK INSTRUMENTS FINANCIAL FRAGILITY BANK LENDING BUDGET CENTRAL BANK POLICY RESPONSE EQUITY CAPITAL FISCAL POLICIES TRADE BALANCE GLOBAL ECONOMY CURRENCY EXCHANGE RATE MOVEMENTS POLICY RESPONSES PORTFOLIO CAPITAL DEBTS EXCHANGE RATES CAPITAL ACCOUNT TRANSACTIONS OPTIONS INTEREST RATES MONETARY FUND FLEXIBLE EXCHANGE RATE CAPITAL OUTFLOWS FINANCIAL INSTITUTIONS MARKETS DEBT CAPITAL MARKET RETURN DEFICITS BUDGET DEFICIT BUDGET DEFICITS INTERNATIONAL ECONOMICS SHORT-TERM CAPITAL LOANS RESERVES BANK CREDIT FINANCIAL SYSTEM FINANCE FOREIGN CURRENCY INTERNATIONAL FINANCIAL INSTITUTIONS TAXES BANKING SECTOR EXPENDITURE TRANSACTIONS EMERGING MARKETS EQUITY INVESTORS FEDERAL RESERVE FOREIGN EXCHANGE RESERVES BOND MARKETS PRIVATE SECTOR BANK RATES OF INFLATION INTERNATIONAL INVESTMENT FINANCIAL CRISIS INTERNATIONAL CAPITAL MARKET CAPITAL MOVEMENTS BUDGETS DOMESTIC BANKING BANK BALANCE SHEETS CAPITAL FLOWS CURRENT ACCOUNT DEFICIT SHARES BALANCE SHEET REAL EXCHANGE RATE MARKET LOCAL CURRENCY FOREIGN EXCHANGE MONETARY POLICIES SECURITIES PUBLIC DEBT CAPITAL INFLOW INFLATION RATES INSURANCE CURRENCIES GOVERNMENT DEBT CURRENCY DEPRECIATION FINANCIAL LIBERALIZATION GOODS SECURITY INVESTMENT BOND DOMESTIC CREDIT SHARE BALANCE SHEETS FINANCIAL MARKETS POLITICAL STABILITY BID CAPITAL INFLOWS REVENUE MONEY MARKET MONEY MARKET INSTRUMENTS LENDING CONSUMER PRICE INDEX CREDIT GROWTH CAPITAL FLOW EXCHANGE RATE INSTRUMENT RISK AVERSION PORTFOLIO FLOWS LIABILITIES OPEN ECONOMIES INTERNATIONAL INVESTORS FOREIGN EQUITY CAPITAL ACCOUNT FINANCIAL OPENNESS CREDIT LINES GUARANTEE DEVELOPMENT BANK POLITICAL RISK
Online Access:	http://documents.worldbank.org/curated/en/2016/04/26219966/managing-sudden-stops http://hdl.handle.net/10986/24213

id	okr-10986-24213
recordtype	oai_dc
spelling	okr-10986-242132021-04-23T14:04:20Z Managing Sudden Stops Eichengreen, Barry Gupta, Poonam CURRENCY MISMATCHES MONETARY POLICY DEFICIT DEPOSIT FOREIGN CAPITAL TRADE CREDIT CHECKS ACCOUNTING MONEY SUPPLIES INTERNATIONAL CAPITAL PUBLIC DEBTS EQUITY FLOWS STOCK FISCAL DEFICITS FOREIGN EXCHANGE MARKET INTEREST TRADE CREDITS MONEY SUPPLY EMERGING ECONOMIES FLEXIBLE EXCHANGE RATES INTEREST RATE OPTION EXCHANGE LIQUIDITY INTERNATIONAL FINANCIAL MARKETS CORPORATE SECURITIES PORTFOLIO BANK INTEREST RATES FISCAL POLICY BONDS MARKET INSTRUMENTS CURRENCY MISMATCH TAX DUMMY VARIABLE RESERVE CENTRAL BANKS INFLATION INTERNATIONAL BANK INSTRUMENTS FINANCIAL FRAGILITY BANK LENDING BUDGET CENTRAL BANK POLICY RESPONSE EQUITY CAPITAL FISCAL POLICIES TRADE BALANCE GLOBAL ECONOMY CURRENCY EXCHANGE RATE MOVEMENTS POLICY RESPONSES PORTFOLIO CAPITAL DEBTS EXCHANGE RATES CAPITAL ACCOUNT TRANSACTIONS OPTIONS INTEREST RATES MONETARY FUND FLEXIBLE EXCHANGE RATE CAPITAL OUTFLOWS FINANCIAL INSTITUTIONS MARKETS DEBT CAPITAL MARKET RETURN DEFICITS BUDGET DEFICIT BUDGET DEFICITS INTERNATIONAL ECONOMICS SHORT-TERM CAPITAL LOANS RESERVES BANK CREDIT FINANCIAL SYSTEM FINANCE FOREIGN CURRENCY INTERNATIONAL FINANCIAL INSTITUTIONS TAXES BANKING SECTOR EXPENDITURE TRANSACTIONS EMERGING MARKETS EQUITY INVESTORS FEDERAL RESERVE FOREIGN EXCHANGE RESERVES BOND MARKETS PRIVATE SECTOR BANK RATES OF INFLATION INTERNATIONAL INVESTMENT FINANCIAL CRISIS INTERNATIONAL CAPITAL MARKET CAPITAL MOVEMENTS BUDGETS DOMESTIC BANKING BANK BALANCE SHEETS CAPITAL FLOWS CURRENT ACCOUNT DEFICIT SHARES BALANCE SHEET REAL EXCHANGE RATE MARKET LOCAL CURRENCY FOREIGN EXCHANGE MONETARY POLICIES SECURITIES PUBLIC DEBT CAPITAL INFLOW INFLATION RATES INSURANCE CURRENCIES GOVERNMENT DEBT CURRENCY DEPRECIATION FINANCIAL LIBERALIZATION GOODS SECURITY INVESTMENT BOND DOMESTIC CREDIT SHARE BALANCE SHEETS FINANCIAL MARKETS POLITICAL STABILITY BID CAPITAL INFLOWS REVENUE MONEY MARKET MONEY MARKET INSTRUMENTS LENDING CONSUMER PRICE INDEX CREDIT GROWTH CAPITAL FLOW EXCHANGE RATE INSTRUMENT RISK AVERSION PORTFOLIO FLOWS LIABILITIES OPEN ECONOMIES INTERNATIONAL INVESTORS FOREIGN EQUITY CAPITAL ACCOUNT FINANCIAL OPENNESS CREDIT LINES GUARANTEE DEVELOPMENT BANK POLITICAL RISK The 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. 2016-05-04T18:13:27Z 2016-05-04T18:13:27Z 2016-04 Working Paper http://documents.worldbank.org/curated/en/2016/04/26219966/managing-sudden-stops http://hdl.handle.net/10986/24213 English en_US Policy Research Working Paper;No. 7639 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	CURRENCY MISMATCHES MONETARY POLICY DEFICIT DEPOSIT FOREIGN CAPITAL TRADE CREDIT CHECKS ACCOUNTING MONEY SUPPLIES INTERNATIONAL CAPITAL PUBLIC DEBTS EQUITY FLOWS STOCK FISCAL DEFICITS FOREIGN EXCHANGE MARKET INTEREST TRADE CREDITS MONEY SUPPLY EMERGING ECONOMIES FLEXIBLE EXCHANGE RATES INTEREST RATE OPTION EXCHANGE LIQUIDITY INTERNATIONAL FINANCIAL MARKETS CORPORATE SECURITIES PORTFOLIO BANK INTEREST RATES FISCAL POLICY BONDS MARKET INSTRUMENTS CURRENCY MISMATCH TAX DUMMY VARIABLE RESERVE CENTRAL BANKS INFLATION INTERNATIONAL BANK INSTRUMENTS FINANCIAL FRAGILITY BANK LENDING BUDGET CENTRAL BANK POLICY RESPONSE EQUITY CAPITAL FISCAL POLICIES TRADE BALANCE GLOBAL ECONOMY CURRENCY EXCHANGE RATE MOVEMENTS POLICY RESPONSES PORTFOLIO CAPITAL DEBTS EXCHANGE RATES CAPITAL ACCOUNT TRANSACTIONS OPTIONS INTEREST RATES MONETARY FUND FLEXIBLE EXCHANGE RATE CAPITAL OUTFLOWS FINANCIAL INSTITUTIONS MARKETS DEBT CAPITAL MARKET RETURN DEFICITS BUDGET DEFICIT BUDGET DEFICITS INTERNATIONAL ECONOMICS SHORT-TERM CAPITAL LOANS RESERVES BANK CREDIT FINANCIAL SYSTEM FINANCE FOREIGN CURRENCY INTERNATIONAL FINANCIAL INSTITUTIONS TAXES BANKING SECTOR EXPENDITURE TRANSACTIONS EMERGING MARKETS EQUITY INVESTORS FEDERAL RESERVE FOREIGN EXCHANGE RESERVES BOND MARKETS PRIVATE SECTOR BANK RATES OF INFLATION INTERNATIONAL INVESTMENT FINANCIAL CRISIS INTERNATIONAL CAPITAL MARKET CAPITAL MOVEMENTS BUDGETS DOMESTIC BANKING BANK BALANCE SHEETS CAPITAL FLOWS CURRENT ACCOUNT DEFICIT SHARES BALANCE SHEET REAL EXCHANGE RATE MARKET LOCAL CURRENCY FOREIGN EXCHANGE MONETARY POLICIES SECURITIES PUBLIC DEBT CAPITAL INFLOW INFLATION RATES INSURANCE CURRENCIES GOVERNMENT DEBT CURRENCY DEPRECIATION FINANCIAL LIBERALIZATION GOODS SECURITY INVESTMENT BOND DOMESTIC CREDIT SHARE BALANCE SHEETS FINANCIAL MARKETS POLITICAL STABILITY BID CAPITAL INFLOWS REVENUE MONEY MARKET MONEY MARKET INSTRUMENTS LENDING CONSUMER PRICE INDEX CREDIT GROWTH CAPITAL FLOW EXCHANGE RATE INSTRUMENT RISK AVERSION PORTFOLIO FLOWS LIABILITIES OPEN ECONOMIES INTERNATIONAL INVESTORS FOREIGN EQUITY CAPITAL ACCOUNT FINANCIAL OPENNESS CREDIT LINES GUARANTEE DEVELOPMENT BANK POLITICAL RISK
spellingShingle	CURRENCY MISMATCHES MONETARY POLICY DEFICIT DEPOSIT FOREIGN CAPITAL TRADE CREDIT CHECKS ACCOUNTING MONEY SUPPLIES INTERNATIONAL CAPITAL PUBLIC DEBTS EQUITY FLOWS STOCK FISCAL DEFICITS FOREIGN EXCHANGE MARKET INTEREST TRADE CREDITS MONEY SUPPLY EMERGING ECONOMIES FLEXIBLE EXCHANGE RATES INTEREST RATE OPTION EXCHANGE LIQUIDITY INTERNATIONAL FINANCIAL MARKETS CORPORATE SECURITIES PORTFOLIO BANK INTEREST RATES FISCAL POLICY BONDS MARKET INSTRUMENTS CURRENCY MISMATCH TAX DUMMY VARIABLE RESERVE CENTRAL BANKS INFLATION INTERNATIONAL BANK INSTRUMENTS FINANCIAL FRAGILITY BANK LENDING BUDGET CENTRAL BANK POLICY RESPONSE EQUITY CAPITAL FISCAL POLICIES TRADE BALANCE GLOBAL ECONOMY CURRENCY EXCHANGE RATE MOVEMENTS POLICY RESPONSES PORTFOLIO CAPITAL DEBTS EXCHANGE RATES CAPITAL ACCOUNT TRANSACTIONS OPTIONS INTEREST RATES MONETARY FUND FLEXIBLE EXCHANGE RATE CAPITAL OUTFLOWS FINANCIAL INSTITUTIONS MARKETS DEBT CAPITAL MARKET RETURN DEFICITS BUDGET DEFICIT BUDGET DEFICITS INTERNATIONAL ECONOMICS SHORT-TERM CAPITAL LOANS RESERVES BANK CREDIT FINANCIAL SYSTEM FINANCE FOREIGN CURRENCY INTERNATIONAL FINANCIAL INSTITUTIONS TAXES BANKING SECTOR EXPENDITURE TRANSACTIONS EMERGING MARKETS EQUITY INVESTORS FEDERAL RESERVE FOREIGN EXCHANGE RESERVES BOND MARKETS PRIVATE SECTOR BANK RATES OF INFLATION INTERNATIONAL INVESTMENT FINANCIAL CRISIS INTERNATIONAL CAPITAL MARKET CAPITAL MOVEMENTS BUDGETS DOMESTIC BANKING BANK BALANCE SHEETS CAPITAL FLOWS CURRENT ACCOUNT DEFICIT SHARES BALANCE SHEET REAL EXCHANGE RATE MARKET LOCAL CURRENCY FOREIGN EXCHANGE MONETARY POLICIES SECURITIES PUBLIC DEBT CAPITAL INFLOW INFLATION RATES INSURANCE CURRENCIES GOVERNMENT DEBT CURRENCY DEPRECIATION FINANCIAL LIBERALIZATION GOODS SECURITY INVESTMENT BOND DOMESTIC CREDIT SHARE BALANCE SHEETS FINANCIAL MARKETS POLITICAL STABILITY BID CAPITAL INFLOWS REVENUE MONEY MARKET MONEY MARKET INSTRUMENTS LENDING CONSUMER PRICE INDEX CREDIT GROWTH CAPITAL FLOW EXCHANGE RATE INSTRUMENT RISK AVERSION PORTFOLIO FLOWS LIABILITIES OPEN ECONOMIES INTERNATIONAL INVESTORS FOREIGN EQUITY CAPITAL ACCOUNT FINANCIAL OPENNESS CREDIT LINES GUARANTEE DEVELOPMENT BANK POLITICAL RISK Eichengreen, Barry Gupta, Poonam Managing Sudden Stops
relation	Policy Research Working Paper;No. 7639
description	The 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.
format	Working Paper
author	Eichengreen, Barry Gupta, Poonam
author_facet	Eichengreen, Barry Gupta, Poonam
author_sort	Eichengreen, Barry
title	Managing Sudden Stops
title_short	Managing Sudden Stops
title_full	Managing Sudden Stops
title_fullStr	Managing Sudden Stops
title_full_unstemmed	Managing Sudden Stops
title_sort	managing sudden stops
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/04/26219966/managing-sudden-stops http://hdl.handle.net/10986/24213
_version_	1764455945481486336

Managing Sudden Stops

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