Thesiss

The Mexican crisis that took place in 1994 was followed by nearly a decade of frequent and severe financial crises in the emerging economies. These crises episodes that were characterized by dramatic reversals in capital flows and large losses in output are atypical to the more …

Recent financial crises in developing countries have exhibited sharp falls in capital flows, i.e. sudden stops and accompanying large output drops. Several models have tried to connect these two facts quantitatively. Since sudden stops cannot generate large output drops quantita…