 This models is particularly related to the situation in emerging markets, because of the larger role of banks compared to other financial institutions in these economies and because it is more difficult for them to get emergency funds from world markets during crisis periods.An alternative explanation of sudden stops focuses on the interaction of temporary and permanent technology shocks, where highly volatile trend shocks in emerging market economies are closely related to sudden stop episodes.Emerging markets are characterized by frequent regime switches related to changes in fiscal, monetary and trade policies, which reflect in more volatile shocks to the trend.