Transmission of the U.S. subprime crisis to emerging markets: Evidence on the decoupling-recoupling hypothesis
AbstractWe find that emerging markets appeared to be somewhat insulated from developments in U.S. financial markets from early 2007 to summer 2008. From that point on, however, emerging markets responded very strongly to the deteriorating situation in the U.S. financial system and real economy. Our regression "event study," focusing on 15 types of news, indicates that a range of financial and real economic news emanating from the US had statistically and economically large impacts on 14 emerging markets and several news events uniformly moved markets. Policy measures taken in emerging markets to insulate themselves from global financial developments proved inadequate in the face of the credit crunch and decline in international trade that followed the Lehman bankruptcy in September 2008.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Money and Finance.
Volume (Year): 28 (2009)
Issue (Month): 8 (December)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30443
Subprime crisis Emerging market crisis CDS spreads transmission of crisis;
Other versions of this item:
- Michael P. Dooley & Michael M. Hutchison, 2009. "Transmission of the U.S. Subprime Crisis to Emerging Markets: Evidence on the Decoupling-Recoupling Hypothesis," NBER Working Papers 15120, National Bureau of Economic Research, Inc.
- F3 - International Economics - - International Finance
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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