TY - BOOK ID - 135340970 TI - Sudden stops : Are global and local investors alike? AU - Calderon, Cesar AU - Kubota, Megumi PY - 2011 PB - Washington, D.C., The World Bank, DB - UniCat KW - Access to Finance KW - Currencies and Exchange Rates KW - Debt Markets KW - Economic Theory & Research KW - Emerging Markets KW - Gross Capital Flows KW - Macroeconomics and Economic Growth KW - Reversals KW - Sudden Stop UR - https://www.unicat.be/uniCat?func=search&query=sysid:135340970 AB - The 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. ER -