 There is a distinguishable boom–bust cycle, as unsustainable massive capital inflows that precede a sudden stop episode sharply increase economic activity.Other studies focus on the relationship between current account reversals and sudden stops in both emerging markets and advanced economies.Using cross-country data for a sample of 157 countries during the 1970-2001 period, the results indicate that 46.1% of countries that suffered a sudden stop also faced a current account reversal, while 22.9% of countries that faced current account reversals also faced a sudden stop episode.