Does openness to trade make countries more vulnerable to sudden stops, or less?
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Does openness to trade make countries more vulnerable to sudden stops, or less? using gravity to establish causality by Jeffrey A. Frankel

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Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

Subjects:

  • Free trade.,
  • Business cycles.,
  • Financial crises.

Book details:

Edition Notes

StatementJeffrey A. Frankel, Eduardo A. Cavallo.
SeriesNBER working paper series ;, working paper 10957, Working paper series (National Bureau of Economic Research : Online) ;, working paper no. 10957.
ContributionsCavallo, Eduardo A., National Bureau of Economic Research.
Classifications
LC ClassificationsHB1
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL3476020M
LC Control Number2005615466

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Does openness to trade make countries more vulnerable to sudden stops, or less? Using gravity to establish causality / by Eduardo A. Cavallo, Jeffrey A. Frankel. p. cm. (Research Department Working paper series ; ) Includes bibliographical references. 1. Free trade. 2. Economic crises—Econometric models. I. Frankel, Jeffrey A. II. Inter-. Downloadable (with restrictions)! Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflows. Several authors have offered empirical evidence that having a large tradable sector reduces the contraction necessary to adjust to a given cut-off in funding. Such studies may, however, be subject to the problem that trade is. Does Openness to Trade Make Countries More Vulnerable to Sudden Stops, or Less? Using Gravity to Establish Causality. Eduardo Cavallo and Jeffrey Frankel (). No , Research Department Publications from Inter-American Development Bank, Research Department Abstract: Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops Cited by: We use the gravity instrument for trade openness, which is constructed from geographical determinants of bilateral trade. We find that openness indeed makes countries less vulnerable, both to severe sudden stops and currency crashes, and that the relationship is even stronger when correcting for the endogeneity of trade.

CiteSeerX - Scientific documents that cite the following paper: Does Openness to Trade Make Countries More Vulnerable to Sudden Stops or Less? Using Gravity to Stablish Causality”, NBER Working Papers , National Bureau of Economic Research. sudden stops. The first view is that openness makes a country more vulnerable to sudden stops. A country highly integrated into world markets is more exposed to shocks coming from abroad. The second view is that countries that are open to international trade are less vulnerable to sudden stops. On the empirics of sudden stops: the relevance of balance-sheet effects. National Bureau of Economic Research. Calvo, G.A. and Reinhart, C.M., (). When capital inflows come to a sudden stop: consequences and policy options. Cavallo, E.A. and Frankel, J.A. (). ‘Does openness to trade make countries more vulnerable to sudden stops, or less?   E.A. Cavallo, J.A. FrankelDoes openness to trade make countries more vulnerable to sudden stops, or Less? Using gravity to establish causality Using gravity to establish causality Journal of International Money and Finance, 27 (), pp.

Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflows, crashes in currencies, or severe recessions. Some believe that openness raises vulnerability to foreign shocks, while others believe that it makes adjustment to crises less Author: Eduardo A. Cavallo and Jeffrey Frankel. Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflow, currency crashes, or severe recessions. Some believe that openness raises vulnerability to foreign shocks, while others believe that it makes adjustment to crises less : Jeffrey A. Frankel and Eduardo A. Cavallo. We use the gravity instrument for trade openness, which is constructed from geographical determinants of bilateral trade. We find that openness indeed makes countries less vulnerable to crises, and that the relationship is even stronger when correcting for the endogeneity of stops Current account adjustment Trade Gravity model. Using country-level panel data, Cavallo and Frankel () found robust empirical evidence that economies that trade more with other countries are less vulnerable to sudden stops .