Financial Statistics (accessed through Haver Analytics). We have data for 20 emerging markets in 1991, 28 in 1995, and 34 from 2000 onwards, resulting in an unbalanced panel. In robustness checks we work with a smaller, balanced sample for which data are available for the entire period.<sup>6</sup> Sudden stops are periods when inflows are a certain number of standard deviations below their average in a specified number of prior years. Most studies only classify episodes as such when they last more than one quarter. While some papers focus on net capital inflows by nonresidents, others add net capital outflows by residents.<sup>7</sup> Some papers use data for all capital flows, while others use data for only items other than FDI on the grounds that FDI flows are relatively stable.<sup>8</sup> We focus on portfolio flows and “other flows” (consisting in practice primarily of loans and trade credits) by nonresidents, on the grounds that these are the volatile component (see Figure 1).<sup>9</sup> We classify an episode as a sudden stop when portfolio and other inflows by nonresidents decline below the average in the previous 20 quarters by at least one standard deviation, when the decline lasts for more than one quarter, and when flows are two standard deviations below their prior average in at least in one quarter. Episodes end when capital flows recover to the prior mean minus one standard deviation. When two sudden stops occur in close proximity (which is the case in only a few instances), we treat them as a single episode.<sup>10</sup> The resulting dates are listed in Appendix Table 1. We double-checked the list for consistency against country details provided in IMF Article IV reports.<sup>11</sup> Episodes identified by an alternative criterion where the sudden stop ends when capital flows recover to the average of the past 20 quarters are listed in the Appendix as well.

> 6 The full list of countries and the periods for which their data are available is in Appendix A.

> 7 Cavallo et al (2013) show that the sudden stops in flows from non-residents tend to be larger and have larger impacts on economies than those which are driven by outflows by residents.

8 Calvo et al (2004), in an early influential study, use monthly data for 20 advanced and emerging markets over the period 1990-2001. Since capital flow data are unavailable monthly, they instead use the change in reserves and the trade balance. According to their definition, a sudden stop begins when capital flows so measured fall one standard deviation below the mean for the past 24 months; the episode continues until flows recover to above the earlier mean. In addition they require that in at least one month during the duration of the episode capital flows fall 2 standard deviations below their earlier mean. Forbes and Warnock (2012) define sudden stops similarly but use data on actual capital flows available at a quarterly frequency. A sudden stop is said to occur when the year-on-year change in capital flows over four quarters is at least one standard deviation below the average in previous five years and when in at least one quarter flows are two standard deviations below that prior average. They discard episodes lasting only one quarter.

9 In addition, we provide some limited comparisons with other categories of capital movements (FDI flows and portfolio flows by residents), which reinforce the contrast and help to justify the focus.

10 In some cases where the criterion of capital flows declining by 2 standard deviations below mean was missed by a whisker, we still identified that episode as a sudden stop. One could of course measure capital flows and their volatility in a number of different ways. In focusing on gross inflows by nonresidents, we follow Efremidze et al. (2015), who show that sharp reductions in gross flows from abroad tend to be most strongly associated with sudden stops as defined here (and are more informative for understanding the latter than, inter alia, net flows).

11 In a very few cases where we noted discrepancies, we took the qualitative discussion in the Article IV reports as definitive.

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