When Capital Inflows Come to a Sudden Stop : Consequences and Policy Options

  title={When Capital Inflows Come to a Sudden Stop : Consequences and Policy Options},
  author={Guillermo Calvo and Carmen M. Reinhart},
In this paper we present evidence that capital account reversals have become more severe for emerging markets. Because policy options are limited in the midst of a capital market crisis and because so many countries have already had crises recently, we focus on some of the policies that could reduce the incidence of crises in the first place, or at least make the sudden stop problem less severe. In this regard, we consider the relative merits of capital controls and dollarization. We conclude… CONTINUE READING
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