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Country risk and capital flow reversals

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  • Razin, Assaf
  • Sadka, Efraim

Abstract

A financial crisis with a capital flow reversal occurs when a country shifts abruptly from a 'good' equilibrium with a low country-specific risk premium to a 'bad' equilibrium with a high country-specific risk premium and no foreign credit.
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Suggested Citation

  • Razin, Assaf & Sadka, Efraim, 2001. "Country risk and capital flow reversals," Economics Letters, Elsevier, vol. 72(1), pages 73-77, July.
  • Handle: RePEc:eee:ecolet:v:72:y:2001:i:1:p:73-77
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    References listed on IDEAS

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    1. Gordon, Roger H & Bovenberg, A Lans, 1996. "Why Is Capital So Immobile Internationally? Possible Explanations and Implications for Capital Income Taxation," American Economic Review, American Economic Association, vol. 86(5), pages 1057-1075, December.
    2. Bernanke, Ben & Gertler, Mark, 1989. "Agency Costs, Net Worth, and Business Fluctuations," American Economic Review, American Economic Association, vol. 79(1), pages 14-31, March.
    3. Townsend, Robert M., 1979. "Optimal contracts and competitive markets with costly state verification," Journal of Economic Theory, Elsevier, vol. 21(2), pages 265-293, October.
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    Cited by:

    1. Hutchison, Michael M. & Noy, Ilan & Wang, Lidan, 2010. "Fiscal and monetary policies and the cost of sudden stops," Journal of International Money and Finance, Elsevier, vol. 29(6), pages 973-987, October.
    2. Hutchison, Michael M. & Noy, Ilan, 2006. "Sudden stops and the Mexican wave: Currency crises, capital flow reversals and output loss in emerging markets," Journal of Development Economics, Elsevier, vol. 79(1), pages 225-248, February.
    3. Vladimir Teles & Joaquim Andrade, 2008. "Monetary policy and country risk," Applied Economics, Taylor & Francis Journals, vol. 40(15), pages 2021-2028.
    4. Augusto de la Torre & Eduardo Levy Yeyati & Sergio L. Schmukler, 2003. "Living and Dying with Hard Pegs: The Rise and Fall of Argentina’s Currency Board," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 43-108, January.
    5. Joaquim Andrade & Vladimir Teles, 2006. "An empirical model of the Brazilian country risk -- an extension of the beta country risk model," Applied Economics, Taylor & Francis Journals, vol. 38(11), pages 1271-1278.
    6. Razin, Assaf & Sadka, Efraim, 2002. "A Brazilian Debt-Crisis Model," CEPR Discussion Papers 3541, C.E.P.R. Discussion Papers.
    7. Chigbu Ezeji E. & Ubah Chijindu Promise & Chigbu Uzoamaka S., 2015. "Impact of Capital Inflows on Economic Growth of Developing Countries," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 1(7), pages 7-21, June.
    8. Assaf Razin & Efraim Sadka, 2002. "A Brazilian Debt-Crisis," NBER Working Papers 9160, National Bureau of Economic Research, Inc.
    9. Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2003. "Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why it Matters," NBER Working Papers 10036, National Bureau of Economic Research, Inc.
    10. Mario Coccia, 2004. "Analysis of country risk and taxonomic arrangement," CERIS Working Paper 200414, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    11. Assaf Razin & Efraim Sadka, 2003. "A Brazilian-Type Debt Crisis: Simple Analytics," NBER Working Papers 9606, National Bureau of Economic Research, Inc.

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    JEL classification:

    • F3 - International Economics - - International Finance

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