IDEAS home Printed from https://ideas.repec.org/a/wsi/serxxx/v60y2015i02ns0217590815500125.html
   My bibliography  Save this article

Economic Growth Effects Of An International Crisis

Author

Listed:
  • OSCAR AFONSO

    (Universidade do Porto, Faculdade de Economia, OBEGEF and NIFIP, Rua Roberto Frias 4200-464 Porto, Portugal)

  • RUI HENRIQUE ALVES

    (Universidade do Porto, Faculdade de Economia, OBEGEF and NIFIP, Rua Roberto Frias 4200-464 Porto, Portugal)

Abstract

We develop a general equilibrium endogenous growth model where final goods are produced in either the exporter sector or the importer sector, in order to analyze the short, medium and long-run growth effects of an external demand shock induced by an international crisis, such as the current one. Depending on the policy response, such a shock might (or might not) severely affect competitiveness, wage inequality, the economic growth rate and the technological-knowledge bias. This bias controls the paths towards the new steady state. The model shows that countries with balanced public finances can accommodate the external shock and that the intervention should be prompt, as the delay is costly. Results appear to be supported by empirical evidence.

Suggested Citation

  • Oscar Afonso & Rui Henrique Alves, 2015. "Economic Growth Effects Of An International Crisis," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(02), pages 1-16.
  • Handle: RePEc:wsi:serxxx:v:60:y:2015:i:02:n:s0217590815500125
    DOI: 10.1142/S0217590815500125
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217590815500125
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1142/S0217590815500125?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mr. Chris Papageorgiou & Mr. Andrew Berg & Ms. Catherine A Pattillo & Mr. Nikola Spatafora, 2010. "The End of An Era? the Medium- and Long-Term Effects of the Global Crisison Growth in Low-Income Countries," IMF Working Papers 2010/205, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mr. Chris Papageorgiou & Hans Weisfeld & Ms. Catherine A Pattillo & Mr. Martin Schindler & Mr. Nikola Spatafora & Mr. Andrew Berg, 2011. "Global Shocks and their Impacton Low-Income Countries: Lessons From theglobal Financial Crisis," IMF Working Papers 2011/027, International Monetary Fund.
    2. 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.
    3. Dabla-Norris, Era & Bal Gündüz, Yasemin, 2014. "Exogenous Shocks and Growth Crises in Low-Income Countries: A Vulnerability Index," World Development, Elsevier, vol. 59(C), pages 360-378.
    4. Yasemin Bal Gündüz & Masyita Crystallin, 2018. "Do IMF programs catalyze donor assistance to low-income countries?," The Review of International Organizations, Springer, vol. 13(3), pages 359-393, September.
    5. Zoran Grubisic & Perisa Ivanovic, 2012. "Influence of different monetary regimes on financial stability in see countries," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(1), pages 91-106.
    6. Bal Gündüz, Yasemin, 2016. "The Economic Impact of Short-term IMF Engagement in Low-Income Countries," World Development, Elsevier, vol. 87(C), pages 30-49.
    7. Mr. Montfort Mlachila & Mr. Tidiane Kinda, 2011. "The Quest for Higher Growth in the WAEMU Region: The Role of Accelerations and Decelerations," IMF Working Papers 2011/174, International Monetary Fund.
    8. SENBETA, Sisay Regassa, 2012. "How important are external shocks in explaining growth in Sub-Saharan Africa? Evidence from a Bayesian VAR," Working Papers 2012010, University of Antwerp, Faculty of Business and Economics.

    More about this item

    Keywords

    External demand shock; economic growth; public accounts; competitiveness; wages; C63; J31; O31;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    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:wsi:serxxx:v:60:y:2015:i:02:n:s0217590815500125. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/ser/ser.shtml .

    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.