This paper extends the literature on gross capital flows by looking into domestic factors that covary significantly with cross-country differences in the transitional likelihoods of moving between episodes of capital inflows. Applying a state-transition framework, we view states of gross capital inflows as “normal”, “surge”, and “stop”. Abstracting from time-varying common cyclical components by using fixed-transitional likelihoods and average values of domestic factors, the findings show that cross-country variation in transitional likelihoods are strongly related to the duration and occurrence of previous episodes and less on idiosyncratic domestic factors. This implies limited scope in backing the trend on global financial cyclical flows
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