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How resilient and countercyclical were emerging economies during the global financial crisis?

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  • Didier, Tatiana
  • Hevia, Constantino
  • Schmukler, Sergio L.

Abstract

By studying the cross-country incidence of the 2008–2009 global financial crisis, we document a structural break in the way emerging economies responded to the global shock. Contrary to popular perceptions, emerging economies suffered growth collapses (relative to the pre-crisis levels) comparable to those experienced by developed economies, even when they continued growing. Afterwards, most economies returned to their pre-crisis growth rates. Although emerging economies were not able to avoid the collapse originated in the U.S. and then transmitted across countries, they were more resilient during the global crisis than during past crises. Namely, they resumed their higher growth rates earlier and converged more quickly to their pre-crisis growth trend. Moreover, breaking with the past, emerging economies did not fall more than developed economies during the global crisis and were able to conduct countercyclical policies, thus becoming more similar to developed economies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 31 (2012)
Issue (Month): 8 ()
Pages: 2052-2077

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Handle: RePEc:eee:jimfin:v:31:y:2012:i:8:p:2052-2077

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Web page: http://www.elsevier.com/locate/inca/30443

Related research

Keywords: Crisis transmission; Contagion; Countercyclical/procyclical policy; Fiscal policy; Monetary policy;

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References

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Citations

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Cited by:
  1. Ceballos, Francisco & Didier, Tatiana & Hevia, Constantino & Schmukler, Sergio, 2013. "Policy Responses to the Global Financial Crisis: What Did Emerging Economies Do Differently?," Working Papers 2013-002, Banco Central de Reserva del Perú.
  2. Volker Ziemann, 2013. "Do Structural Policies Affect Macroeconomic Stability?," OECD Economics Department Working Papers 1075, OECD Publishing.
  3. Joshua Aizenman & Yothin Jinjarak & Donghyun Park, 2013. "Fundamentals and Sovereign Risk of Emerging Markets," NBER Working Papers 18963, National Bureau of Economic Research, Inc.
  4. de la Torre, Augusto & Didier, Tatiana & Pinat, Magali, 2014. "Can Latin America tap the globalization upside ?," Policy Research Working Paper Series 6837, The World Bank.
  5. Dąbrowski, Marek A. & Śmiech, Sławomir & Papież, Monika, 2013. "Monetary policy options for mitigating the impact of the global financial crisis on emerging market economies," MPRA Paper 56337, University Library of Munich, Germany.
  6. Aizenman, Joshua & Dekle, Robert & Lothian, James R., 2012. "Overview of the special issue on “Policy Implications of and Lessons from the Global Financial Crisis”," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 1971-1975.

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