Document details

Stops and bonanzas in the EU: Does being part of the Euro Area make a difference?

Author(s): Rodrigues, Maria Madalena Godinho de Sampaio

Date: 2015

Persistent ID: http://hdl.handle.net/10362/15392

Origin: Repositório Institucional da UNL

Subject(s): Capital flows; Sudden stops; Bonanzas; Push and pull factors; European Union


Description

In this paper, we investigate whether being part of the euro area influences the conditional probability of going through a sudden stop or a bonanza of capital flows. Our sample period is from 1995 until 2014. We identify these two phenomena and we evaluate which push and pull factors help predict the conditional probability of experiencing one of them. We find that most countries had significant capital inflows until 2008 and that there were more sudden stops during the recent financial crisis than in any other moment in our sample. The factors that better help forecast the conditional probability of a sudden stop are global uncertainty (represented by the push factor “Volatility Index”), and the domestic economic activity (pull factors “GDP growth” and “consumer confidence”). An indicator of country risk (pull factor “change in credit rating”) is the most significant one for predicting bonanzas. Ultimately, we find no evidence that being part of the euro area influences the conditional probability of going through a sudden stop or a bonanza.

Document Type Master thesis
Language English
Advisor(s) Freitas, Miguel Lebre de; Nunes, Luís Catela
Contributor(s) Rodrigues, Maria Madalena Godinho de Sampaio
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