Capital inflows lead to economic crises in small open economies
This paper looks at how money coming into a small country can cause economic ups and downs. The researchers made a model to show how this happens, using what happened in Iceland as an example. They found that when money suddenly stops coming in, it can mess up the economy. They also talked about using rules to control how much money can come in during a crisis. The researchers say that these rules can help stop the bad effects of money coming in and out of a small country.