01970cas a2200241 a 4500 AALejournalIMF006647 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455201877 1018-5941 BD-DhAAL BD-DhAAL Dagher, Jihad. Sudden Stops, Output Drops, and Credit Collapses / Jihad Dagher. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper proposes a tractable Sudden Stop model to explain the main patterns in firm level data in a sample of Southeast Asian firms during the Asian crisis. The model, which features trend shocks and financial frictions, is able to generate the main patterns observed in the sample during and following the Asian crisis, including the ensuing credit-less recovery, which are also patterns broadly shared by most Sudden Stop episodes as documented in Calvo and others (2006). The model also proposes a novel explanation as to why small firms experience steeper declines than their larger peers as documented in this paper. This size effect is generated under the assumption that small firms are growth firms, to which there is support in the data. Trend shocks when combined with financial frictions in this model also generate strong leverage effects in line with what is observed in the sample, and with other observations from the literature. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2010/176 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/176/001.2010.issue-176-en.xml IMF e-Library