Advanced Search
MyIDEAS: Login

Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions

Contents:

Author Info

  • Karl Aiginger

    ()
    (Austrian Institute of Economic Research WIFO, AUSTRIA)

Abstract

The growth performance of countries proved to be very different during the recent financial crisis. The objective of the paper is to investigate why, despite the fact that the crisis hit countries simultaneously, the length and depth of the crisis turned out to be very different across countries. We apply principal component analysis to derive a single indicator for growth performance which includes different aspects of GDP dynamics before and after the crisis. Then we apply multivariate regressions analysis to analyze whether pre-crisis economic conditions and/or structural characteristics can explain the differences in growth performance in a sample of 37 countries. We focus primarily on industrialized countries but also include dynamic emerging economies. The pre-crisis conditions we investigate include the fiscal situation, trade competitiveness, output and credit growth; the structural characteristics we selected were country size, openness, the share of specific sectors and per capita income. The three indicators which proved to explain most robustly the cross country differences in the recent crisis and thus could also be used as predictors for future crises are the current account position, credit growth and GDP growth in the run-up period. Trade competitiveness improved the performance in the crisis. Past credit and GDP growth impaired country performance.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bapress.ca/Journal-4/Why%20Growth%20Performance%20Differed%20across%20Countries%20in%20the%20Recent%20Crisis-%20the%20Impact%20of%20Pre-crisis%20Conditions.pdf
Download Restriction: no

Bibliographic Info

Article provided by Better Advances Press, Canada in its journal Review of Economics & Finance.

Volume (Year): 1 (2011)
Issue (Month): (August)
Pages: 35-52

as in new window
Handle: RePEc:bap:journl:110403

Contact details of provider:
Postal: 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada
Phone: +1-647-728-3961
Web page: http://www.bapress.ca

Order Information:
Postal: 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada
Email:

Related research

Keywords: Financial crisis; Cross country performance; Trade competitiveness;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Lawrence J. Christiano & Martin Eichenbaum & Sergio Rebelo, 2010. "When is the government spending multiplier large?," CQER Working Paper 2010-01, Federal Reserve Bank of Atlanta.
  2. Rose, Andrew K & Spiegel, Mark, 2009. "Cross-Country Causes and Consequences of the 2008 Crisis: International Linkages and American Exposure," CEPR Discussion Papers 7466, C.E.P.R. Discussion Papers.
  3. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "The Aftermath of Financial Crises," American Economic Review, American Economic Association, vol. 99(2), pages 466-72, May.
  4. Drautzburg, Thorsten & Uhlig, Harald, 2011. "Fiscal stimulus and distortionary taxation," ZEW Discussion Papers 11-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Andrew K. Rose & Mark M. Spiegel, 2009. "Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning," NBER Working Papers 15357, National Bureau of Economic Research, Inc.
  6. Michael P. Dooley, 2003. "Introduction to "Managing Currency Crises in Emerging Markets"," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 1-8 National Bureau of Economic Research, Inc.
  7. E. Philip Davis & Dilruba Karim, 2008. "Could Early Warning Systems Have Helped To Predict the Sub-Prime Crisis?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 206(1), pages 35-47, October.
  8. Laeven, Luc & Valencia, Fabián, 2012. "The use of blanket guarantees in banking crises," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 1220-1248.
  9. Devereux, Michael B. & Kollmann, Robert & Roeger, Werner, 2011. "Advances in international macroeconomics: Lessons from the crisis," European Economic Review, Elsevier, vol. 55(3), pages 307-308, April.
  10. Philip Lane & Gian Maria Milesi-Ferretti, 2010. "The Cross-Country Incidence of the Global Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp333, IIIS.
  11. Douglas W. Diamond & Raghuram G. Rajan, 2012. "Illiquid Banks, Financial Stability, and Interest Rate Policy," Journal of Political Economy, University of Chicago Press, vol. 120(3), pages 552 - 591.
  12. Ludger Schuknecht & Albert Jaeger, 2004. "Boom-Bust Phases in Asset Prices and Fiscal Policy Behavior," IMF Working Papers 04/54, International Monetary Fund.
  13. Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises," IMF Working Papers 08/224, International Monetary Fund.
  14. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
  15. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-78, May.
  16. Michael P. Dooley & Jeffrey A. Frankel, 2003. "Managing Currency Crises in Emerging Markets," NBER Books, National Bureau of Economic Research, Inc, number dool03-1, May.
  17. Gaston Gelos & Robert Rennhack & James P Walsh & Pelin Berkmen, 2009. "The Global Financial Crisis," IMF Working Papers 09/280, International Monetary Fund.
  18. Karl Aiginger, 2010. "Post Crisis Policy: Some Reflections of a Keynesian Economist," WIFO Working Papers 371, WIFO.
  19. Jesus Crespo Cuaresma & Gerhard Reitschuler & Maria Antoinette Silgoner, 2009. "On the effectiveness and limits of fiscal stabilizers," Applied Economics, Taylor & Francis Journals, vol. 43(9), pages 1079-1086.
  20. Aiginger, Karl, 2010. "The Great Recession versus the Great Depression: stylized facts on siblings that were given different foster parents," Economics Discussion Papers 2010-9, Kiel Institute for the World Economy.
  21. Perotti, Roberto, 2011. "The Effects of Tax Shocks on Output: Not So Large, But Not Small Either," CEPR Discussion Papers 8252, C.E.P.R. Discussion Papers.
  22. Stijn Claessens & Giovanni Dell'Ariccia & Deniz Igan & Luc Laeven, 2010. "Cross-country experiences and policy implications from the global financial crisis," Economic Policy, CEPR & CES & MSH, vol. 25, pages 267-293, 04.
  23. Karl Aiginger, 2006. "Competitiveness: From a Dangerous Obsession to a Welfare Creating Ability with Positive Externalities," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 161-177, June.
  24. Tamim Bayoumi & Reginald Darius, 2011. "Reversing the Financial Accelerator," IMF Working Papers 11/26, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ádám Török & Gyöngyi Csuka & Bernadett Kovács & Anita Veres, 2013. "The "resurrection" of industrial policy in the European Union and its impact on industrial policy in the New Member Countries," WWWforEurope Working Papers series 26, WWWforEurope.
  2. Miklós Antal & Jeroen C.J.M. van den Bergh, 2014. "Macroeconomics, Financial Crisis and the Environment. Strategies for a Sustainability Transition," WIFO Working Papers 464, WIFO.
  3. Concha Betrán & María A. Pons, 2013. "Understanding Spanish Financial crises, 1850-2000: What determined their severity?," Working Papers 0048, European Historical Economics Society (EHES).
  4. Karl Aiginger & Susanne Bärenthaler-Sieber & Johanna Vogel, 2013. "Competitiveness under New Perspectives," WWWforEurope Working Papers series 44, WWWforEurope.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bap:journl:110403. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bill Yan).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.