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Global Recession And Eurozone Debt Crisis - Impact On Exports Of China And India

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  • Pami Dua

    (Departments of Economics, Delhi School of Economics, University of Delhi, India)

  • Divya Tuteja

    (Departments of Economics, Delhi School of Economics, University of Delhi, India)

Abstract

We study the impact of recent crisis episodes viz. the global recession of 2008-09 and the Eurozone debt crisis of 2010-12 on the Emerging Market Economies (EMEs) of China and India. Macroeconomic indicators suggest that both China and India were impacted by the crises. We focus on the trade channel of transmission of the crises i.e. on exports from China and India to the U.S. and Euro Area respectively. This study finds that the exports from China and India to both the destinations were affected as a result of the crisis episodes with major exporting sectors of the two economies displaying negative rates of growth. Further, Markovswitching autoregressive models are utilized to examine the regimes in the growth rate of total value of exports to the U.S. and Eurozone. We find presence of slowdown and pickup regimes in the export growth rates. Furthermore, Markov-switching regression results suggest that the economic activity levels in the U.S. and the Eurozone significantly and positively affect the exports to these destinations from China and India across high as well as low export growth rate regimes. As a result, a dampening of the economic activity in the U.S. and Eurozone in the wake of the crises led to a reduction in the rate of growth of exports from China and India due to a fall in the demand for exports.

Suggested Citation

  • Pami Dua & Divya Tuteja, 2015. "Global Recession And Eurozone Debt Crisis - Impact On Exports Of China And India," Working papers 242, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:242
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
    3. Goldfeld, Stephen M. & Quandt, Richard E., 1973. "A Markov model for switching regressions," Journal of Econometrics, Elsevier, vol. 1(1), pages 3-15, March.
    4. Jaime Marquez & John Schindler, 2007. "Exchange-rate Effects on China's Trade," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 837-853, November.
    5. Hamilton, James D., 1990. "Analysis of time series subject to changes in regime," Journal of Econometrics, Elsevier, vol. 45(1-2), pages 39-70.
    6. Pami Dua & Anirvan Banerji, 2001. "A Leading Index for India's Exports," Occasional papers 1, Centre for Development Economics, Delhi School of Economics.
    7. Anirvan Banerji & Pami Dua, 2010. "Synchronisation of Recessions in Major Developed and Emerging Economies," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(2), pages 197-223, May.
    8. Junsoo Lee & Mark C. Strazicich, 2003. "Minimum Lagrange Multiplier Unit Root Test with Two Structural Breaks," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1082-1089, November.
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    10. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    11. Pami Dua & Anirvan Banerji, 2007. "Predicting Indian Business Cycles-- Leading Indices for External and Domestic Sectors," Working papers 156, Centre for Development Economics, Delhi School of Economics.
    12. Stephen Goldfeld & Richard Quandt, 1973. "The Estimation of Structural Shifts by Switching Regressions," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 2, number 4, pages 475-485 National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Global Recession; Eurozone Debt crisis; China; India; Exports; Trade Channel;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G01 - Financial Economics - - General - - - Financial Crises

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