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Sudden stops in capital flows are a form of financial whiplash that creates instability and crises in the affected economies. Sudden stops in net capital flows trigger current account reversals as countries that were borrowing on net from the rest of the world before the stop can no longer...
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This chapter surveys recent research on international financial crises. A financial crisis is characterized by a sudden, dramatic outflow of financial resources from an economy with an open capital account. This outflow may be primarily driven by the expectation of a large nominal devaluation,...
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This paper analyzes the dynamics of sectoral Real Gross Value Added (RGVA) around sudden stops in foreign capital inflows. We identify sudden stop episodes statistically from changes in gross capital inflows from the financial account, and use an event study methodology to compare RGVA before...
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The article analyzes Mexico under globalization, particularly on the free mobility of capital. It argues that … globalization has detrimentally impacted the productive and external sectors, causing the economy to become excessively reliant on … peso is unsustainable. Given the meager growth of the world economy and trade, globalization is being questioned and …
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