TY  - JOUR
AU  - Rothenberg,Alexander D.
AU  - Warnock,Francis E.
TI  - Sudden Flight and True Sudden Stops
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12726
PY  - 2006
Y2  - December 2006
UR  - http://www.nber.org/papers/w12726
L1  - http://www.nber.org/papers/w12726.pdf
N1  - Author contact info:
Alexander Rothenberg
Department of Economics
UC Berkeley
Berkeley, CA 94720
E-Mail: alexroth@econ.berkeley.edu

Francis E. Warnock
Darden Business School
University of Virginia
Charlottesville, VA 22906-6550
Tel: 434/924-6076
Fax: 434/243-8945
E-Mail: warnockf@darden.virginia.edu
AB  - We extend the sudden stops literature by allowing crisis episodes to be caused by either the retreat of global investors, as is assumed but not shown in the extant literature, or the sudden flight of local investors. We find that almost half of the previously defined sudden stops are actually episodes of sudden flight. Compared to sudden flight, true sudden stops are bunched and are associated with greater slowdowns in economic activity and sharper currency depreciations. We show that the empirical regularities of sudden flight and true sudden stops are consistent with theoretical models that incorporate gross capital flows and information asymmetries.
ER  -