May 2020: New Liberty Street Economics Blog Post – Modelling the Global Effects of the COVID-19 Sudden Stop in Capital Flows

Posted on by

By Ozge Akinci, Gianluca Benigno, and Albert Queralto

Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy.

This blog post deals with the global effects of the COVID-19 sudden stop in capital flows:

The COVID-19 outbreak has triggered unusually fast outflows of dollar funding from emerging market economies (EMEs). These outflows are known as “sudden stop” episodes, and they are typically followed by economic contractions. In this post, we assess the macroeconomic effects of the COVID-induced sudden stop of capital flows to EMEs, using our open-economy DSGE model.