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The Cross-Country Incidence of the Global Crisis

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  • Lane, Philip R.
  • Milesi-Ferretti, Gian Maria

Abstract

We examine whether the cross-country incidence and severity of the 2008-2009 global recession is systematically related to pre-crisis macroeconomic and financial factors. We find that the pre-crisis level of development, increases in the ratio of private credit to GDP, current account deficits, and openness to trade are helpful in understanding the intensity of the crisis. International risk sharing did little to shield domestic demand from the country-specific component of output declines, while those countries with large pre-crisis current account deficits saw domestic demand fall by much more than domestic output during the crisis.

Suggested Citation

  • Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2010. "The Cross-Country Incidence of the Global Crisis," CEPR Discussion Papers 7954, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7954
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    References listed on IDEAS

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    1. Erik Berglof & Yevgeniya Korniyenko & Alexander Plekhanov & Jeromin Zettelmeyer, 2010. "Understanding the Crisis in Emerging Europe," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(6), pages 985-1008, September.
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    10. Kose, M. Ayhan & Prasad, Eswar S. & Terrones, Marco E., 2009. "Does financial globalization promote risk sharing?," Journal of Development Economics, Elsevier, vol. 89(2), pages 258-270, July.
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    More about this item

    Keywords

    current account; financial crisis; international financial integration; Private credit;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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