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Exogenous Shocks and Growth Crises in Low-Income Countries: A Vulnerability Index

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  • Ms. Era Dabla-Norris
  • Yasemin Bal Gunduz

Abstract

This paper develops a new index which provides early warning signals of a growth crisis in the event of large external shocks in low-income countries. Multivariate regression analysis and a univariate signaling approach are used to map information from a parsimonious set of underlying policy, structural, and institutional indicators into a composite vulnerability index. The results show that vulnerabilities to a growth crisis in low-income countries declined significantly from their peaks in the early 1990s, but have risen in recent years as fiscal policy buffers were expended in the wake of the global financial crisis.

Suggested Citation

  • Ms. Era Dabla-Norris & Yasemin Bal Gunduz, 2012. "Exogenous Shocks and Growth Crises in Low-Income Countries: A Vulnerability Index," IMF Working Papers 2012/264, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2012/264
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    References listed on IDEAS

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    Cited by:

    1. Ambra Altimari & Simona Balzano & Gennaro Zezza, 2018. "Measuring economic vulnerability: a Structural Equation Modeling approach," Working Papers 2018-01, Universita' di Cassino, Dipartimento di Economia e Giurisprudenza.
    2. PINSHI, Christian P., 2021. "Exploring the usefulness of Fintech in the dark era of COVID-19," MPRA Paper 107863, University Library of Munich, Germany.
    3. Camelia Minoiu & Chanhyun Kang & V.S. Subrahmanian & Anamaria Berea, 2015. "Does financial connectedness predict crises?," Quantitative Finance, Taylor & Francis Journals, vol. 15(4), pages 607-624, April.

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