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Macroeconomic Transmission of Eurozone Shocks to Emerging Economies

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  • Bilge Erten
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    Abstract

    This paper analyzes the robustness of emerging economies growth performance to a number of external demand shocks using a Bayesian vector autoregressive (BVAR) model with informative priors on the steady state. We show that more than Vfty percent of the variation in real GDP growth of Latin American emerging economies is explained by external factors, while it is slightly less than Vfty percent for emerging Asia and China. Conditional forecasts of different scenarios indicate that a deepening of the Eurozone recession would create a severe and persistent contraction for emerging economies, depending on the response of the U.S. growth to this shock. Finally, forecasts suggest that a sharp slowdown in China’s growth would have a signiVcant negative impact on emerging economies’ growth, and that the Latin American countries would be more severely hit than the Asian ones.

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    File URL: http://www.cepii.fr/IE/resumeEI.asp?NoDoc=4840
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    Bibliographic Info

    Article provided by CEPII research center in its journal International Economics/Economie Internationale.

    Volume (Year): (2012)
    Issue (Month): 131 ()
    Pages:

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    Handle: RePEc:cii:cepiei:2012-q3-131-3

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    Related research

    Keywords: Eurozone Recession; Transmission of Shocks; Bayesian vector Autoregression; Emerging Economies; Growth Spillovers;

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    Cited by:
    1. Österholm, Pär & Stockhammar, Pär, 2014. "The Euro Crisis and Swedish GDP Growth — A Study of Spillovers," Working Paper 134, National Institute of Economic Research.

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