Why are capital flows so much more volatile in emerging than in developed countries ?

@inproceedings{Broner2005WhyAC,
  title={Why are capital flows so much more volatile in emerging than in developed countries ?},
  author={Fernando Broner and Roberto Rigobon},
  year={2005}
}
The standard deviations of capital flows to emergin g countries are 80 percent higher than those to developed countries. First, we show that very littl e of this difference can be explained by more volatile fundamentals or by higher sensitivity to f undamentals. Second, we show that most of the difference in volatility can be accounted for by th ree characteristics of capital flows: (i) capital flows to emerging countries are more subject to occ asional large negative shocks (“crises”) than… CONTINUE READING

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