IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpif/0502002.html
   My bibliography  Save this paper

Indirect and Compounded Effects of External Crises on Growth in Emerging Markets

Author

Listed:
  • Martin Melecky

    (School of Economics, University of New South Wales)

Abstract

An attempt to quantify possible negative effects of external crises in emerging market economies is made in this paper. The direct and indirect effects of the external crises, here sudden stops in capital flows and currency crises, are estimated and compounded into composite overall effects. In addition, an alternative approach for the analysis of the dynamics is introduced. I find that a current account reversal has a negative effect, both direct and indirect, on economic growth introducing a slowdown exceeding two percentage points in the current year. On the other hand, the direct effect of currency crises is insignificant and unlike in the case of the reversal the indirect effect dominates and delivers a negative overall effect of 1.8 percentage points. The time necessary for the adjustment of actual growth back to its equilibrium rate is roughly 1.8 years after the current account reversal and 1.6 years after the currency crisis. The corresponding cumulative losses are four and 3.3 percentage points for the reversal and the currency crisis, respectively.

Suggested Citation

  • Martin Melecky, 2005. "Indirect and Compounded Effects of External Crises on Growth in Emerging Markets," International Finance 0502002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpif:0502002
    Note: Type of Document - pdf; pages: 34
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/if/papers/0502/0502002.pdf
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. David Fernando LOPEZ ANGARITA, 2006. "Nivel óptimo de Reservas Internacionales y crisis cambiaria en Colombia," Archivos de Economía 3273, Departamento Nacional de Planeación.

    More about this item

    Keywords

    External Crises; Economic Growth; Emerging Market Economies; Panel Data.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpif:0502002. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.