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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.

Suggested Citation

  • Didier, Tatiana & Hevia, Constantino & Schmukler, Sergio L., 2012. "How resilient and countercyclical were emerging economies during the global financial crisis?," Journal of International Money and Finance, Elsevier, vol. 31(8), pages 2052-2077.
  • Handle: RePEc:eee:jimfin:v:31:y:2012:i:8:p:2052-2077
    DOI: 10.1016/j.jimonfin.2012.05.007
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    More about this item

    Keywords

    Crisis transmission; Contagion; Countercyclical/procyclical policy; Fiscal policy; Monetary policy;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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