We contribute to the intense debate on the real effects of …fiscal stimuli by showingthat the impact of government expenditure shocks depends crucially on key countrycharacteristics, such as the level of development, exchange rate regime, openness totrade, and public indebtedness. Based on a...

This paper shows that the quantitative predictions of a DSGE model with an endogenous collateral constraint are consistent with key features of the emerging markets' Sudden Stops. Business cycle dynamics produce periods of expansion during which the ratio of debt to asset values raises enough to...

The current account reversals, large recessions, and price collapses that define Sudden Stops contradict the predictions of a large class of models in which the current account is a vehicle for consumption smoothing and investment financing. This paper shows that the quantitative predictions of...