of years before LCI -4  -3  -2  -1  0  1  2  3  No. of years after LCI  No. of years before LCI -4  4  -3  -2  -1  0  1  2  4  3  4. Real exchange rate (annual change)  percent  percent  3. Inflation rate (Dec./Dec.) appreciation  depreciation  No. of years before LCI -4 -3 -2 -1 0 LCI: large capital inflows  No. of years after LCI 1  2  3  No. of years before LCI 4  -4  -3  -2  -1  No. of years after LCI 0  1  2  3  4  Source: Stylised facts based on the results shown in the professional literature. For the most recent empirical assessments, I resorted to Reinhart and Reinhart  Charts 1–4 in Figure I allow an overall view of what can be expected in terms of the developments in the aforementioned indicators after the episode of large capital inflows comes to an end. They are an indication of which curve profile cannot be precluded by a country after an episode of large capital inflows draws to an end. However, while the curve profiles are similar for most countries, the curve slopes both before and after the end of an episode of large capital inflows may be sharper or less sharp.
Chart 1  Total External Debt  MLT External Debt  percent of GDP  percent of GDP  ST debt (majority private debt) MLT debt  public and publicly guaranteed debt private debt  16.2 16.0  5.3  7.9  deposits of non-residents  12.8  7.8 8.2 16.5  14.1  10.9  37.4  25.6  31.3 17.4  0.6  1.2  1.0  2.6  4.0  2007  2008  20.4 15.6  2006  29.3  2005  30.9  2004  30.0  2008  2007  2006  2005  12.9  2004  60 55 50 45 40 35 30 25 20 15 10 5 0  60 55 50 45 40 35 30 25 20 15 10 5 0  Source: National Bank of Romania, Ministry of Public Finance, National Institute of Statistics  In 2004, the Romanian economy had little financial depth (measured as a ratio of M3 to GDP) of only 25.6 percent. The financial depth increased on the back of massive capital inflows, yet it remains relatively low by advanced economy standards (34.5 percent of GDP in 2008). Given the relatively little financial depth, the effects of capital inflows emerged fast and were significant (Chart 2).