Template-Type: ReDIF-Paper 1.0
Author-Name:  Fritzi Koehler-Geib
Author-X-Name-First: Fritzi
Author-X-Name-Last: Koehler-Geib

Title: Uncertainty about the fundamentals and the occurrence of sudden stops of capital flows: Theory and Empirics
Abstract: We analyse the effect of the uncertainty about the fundamentals on the probability
of sudden stops of capital flows from a theoretical and empirical perspective. Our model
predicts that the probability of crises increases with the uncertainty, ie. the dispersion
of private signals about the true value of the fundamentals. Using two datasets of
Consensus and WES forecasts for 31 developed and developing countries for the time
period from January 1990 until December 2001 we verify the theoretical prediction.
We apply probit estimation controlling for time and country effects. Additionally, we
show that the result is robust for numerous speci¯cations.
Length:  48 pages
Creation-Date:  2006-10
File-URL: http://www.bgpe.de/texte/DP/018_koehler.pdf
File-Format: Application/pdf
File-Function: First version, 2006
Number: 018
Classification-JEL: C72, D82, D84, F21, F32, F34, F41
Keywords: Capital Flows, Government debt, Sudden Stops, Global Games, Coordination Failure
Handle: RePEc:bav:wpaper:018_koehler