External Finance, Sudden Stops, and Financial Crisis: What is Different This Time?
IMF Working Papers, July 1, 2010
Source details
- Canonical URL
- External Finance, Sudden Stops, and Financial Crisis: What is Different This Time?
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Bibliographic details
- Authors: Gülçin Özkan, Filiz D Unsal
- Published: July 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455201419.001
Research objective and model
- Develops a two-country DSGE model to investigate the transmission of a global financial crisis to a small open economy.
- Focus areas (subjects and keywords as provided): Consumption, Currencies, Financial crises, Labor, Money, National accounts, Return on investment, Self-employment; capital demand, capital goods, Consumption, Currencies, domestic economy, DSGE model, economy variable, Emerging Markets, equilibrium mark-up, Financial Crises, financial crisis, Global, net export, nominal price, optimal contract, price adjustment cost, price level, production firm, Return on investment, risk premium, Self-employment, Sudden Stops, WP.
Key findings and results
- Economies hit by a sudden stop arising from financial distress in the global economy are likely to face a more prolonged crisis than sudden stop episodes of domestic origin.
- In contrast to the existing literature, the paper's results suggest that the greater a country's trade integration with the rest of the world, the greater the response of its macroeconomic aggregates to a sudden stop of capital flows.
Implications and interpretation
- Global-origin sudden stops can produce more prolonged adverse dynamics in small open economies than domestically originated sudden stops.
- Trade integration magnifies the macroeconomic response to interruptions in capital flows, implying that openness to trade can increase vulnerability to global financial distress.
Access and format notes
- Publication type: IMF Working Papers
- Available formats and services mentioned: Download PDF; More Formats on IMF eLibrary; Order a Print Copy; Create Citation.
- Preview citation example (format: Chicago) as provided: Gülçin Özkan, and Filiz D Unsal. "External Finance, Sudden Stops, and Financial Crisis: What is Different This Time?", IMF Working Papers 2010, 158 (2010), accessed 9/17/2026, https://doi.org/10.5089/9781455201419.001
This summary is based on the IMF working paper "External Finance, Sudden Stops, and Financial Crisis: What is Different This Time?" by Gülçin Özkan and Filiz D Unsal (Working Paper No. 2010/158).