2007–08 ...nancial crisis, but domestic factors became dominant in the post-crisis. In turn, Avdjiev et al (2017a) ...nd signi...cant changes in the sensitivity of international bank and bond ‡ows to particular global variables: after the crisis, the impact of US monetary policy changes on both types of ‡ows increased, while the responsiveness of cross-border loan ‡ows to global risk conditions declined.

Several papers address the question of what determines the extent to which a country’s capital ‡ows re‡ect world ...nancial conditions – and thereby the country’s exposure to global ...nancial shocks. Financial openness has been singled out as a likely contributing factor, as has ...nancial depth. For example, Bruno and Shin (2015b) ...nd that global factors have a larger impact on cross-border bank ‡ows in more ...nancially open countries with bigger banking ‡ows. The composition of investors and/or ‡ows may also matter, because some may be more sensitive than others to common factors. Thus, Raddatz and Schmukler (2012) stress the role of mutual funds in propagating shocks across countries. Cerutti, Claessens and Puy (2017) argue that the foreign investor base –as re‡ected by the relative importance of global banks and international mutual funds –matters for the sensitivity of emerging-market portfolio and bank in‡ows to global variables.

The literature has paid particular attention to the role of the exchange rate regime. Rey (2013) and Miranda-Agrippino and Rey (2015) argue that the worldwide reach of the global ...nancial cycle renders the Mundellian Trilemma – governing the choice among exchange rate regime, monetary independence, and capital account openness –just a dilemma, so that with an open capital account the exchange rate regime ceases to matter for the international transmission of global ...nancial conditions. Cerutti, Claessens and Rose (2017) ...nd that the (limited) explanatory power of global factors and push variables in capital ‡ow regressions is not sensitive to the exchange rate regime, while Cerutti, Claessens and Puy (2017) conclude that more ‡exible regimes augment, rather than reducing, the e¤ects of global conditions on emerging-market capital in‡ows. In contrast, Obstfeld, Ostry and Qureshi (2017) conclude that, among emerging markets, the response of gross capital in‡ows (speci...cally, portfolio and other investment in‡ows) to global risk, as measured by the VXO index, is signi...cantly greater under ...xed exchange rate regimes than under more ‡exible regimes.<sup>1</sup> In this paper we investigate the contribution of common shocks to the observed patterns of gross capital ‡ows around the world, using a large cross-country annual data set spanning nearly four decades. In contrast with most of the recent literature, which focuses on ‡ows disaggregated by type,<sup>2</sup> our focus is on aggregate gross ‡ows. This allows us to assess the

> 1Bekaert and Mehl (2017) also ...nd that countries with more rigid exchange rate regimes tend to exhibit signi...cantly higher degrees of interest rate pass-through than countries with more ‡exible regimes.

> 2Recent examples include Byrne and Fiess (2016); Eichengreen, Gupta and Masetti (2017); Cerutti, Claessens and Puy (2017); and Cerutti, Claessens and Rose (2017).

2