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The effects of the global crisis on emerging economies

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  • Jean-Pierre Allegret

    () (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

The subprime crisis and its consequences have led to the most severe financial crisis since the Great Depression (IMF, 2009). In this paper, we focus our attention on two main questions. First, we analyze the transmission of the current financial crisis to emerging economies. Two main features distinguish the current episode from the crises of the late 1990s and early 2000s. On the one hand, the main trigger of the crisis is a shock originated in the financial sector of advanced countries. After an initial period of resilience, the financial turmoil in advanced economies hit emerging markets in late 2008. On the other hand, this crisis is characterized by an exceptional synchronization at a worldwide level. In other words, the subprime crisis has led to a global crisis affecting both financial systems across the globe and economic activity in virtually all countries. Emerging markets have been hit by two major shocks in external drivers: the "sudden stop" of capital inflows and the collapse in export demand. Second, taking into account the fact that many financial crises have long-term damages to the path of economic growth (Cerra and Saxena, 2008; Furceri and Zdzienicka, 2011), this paper studies the responses of policy makers in emerging markets to the financial crisis.

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  • Jean-Pierre Allegret, 2014. "The effects of the global crisis on emerging economies," Post-Print hal-01410759, HAL.
  • Handle: RePEc:hal:journl:hal-01410759
    Note: View the original document on HAL open archive server: https://hal-univ-paris10.archives-ouvertes.fr/hal-01410759
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    References listed on IDEAS

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    1. Levy Yeyati, Eduardo & Sturzenegger, Federico & Reggio, Iliana, 2010. "On the endogeneity of exchange rate regimes," European Economic Review, Elsevier, vol. 54(5), pages 659-677, July.
    2. Valerie Cerra & Sweta Chaman Saxena, 2008. "Growth Dynamics: The Myth of Economic Recovery," American Economic Review, American Economic Association, vol. 98(1), pages 439-457, March.
    3. Davide Furceri & Aleksandra Zdzienicka, 2011. "The real effect of financial crises in the European transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(1), pages 1-25, January.
    4. Joshua Aizenman & Yothin Jinjarak & Minsoo Lee & Donghyun Park, 2012. "Developing countries' financial vulnerability to the euro crisis: An event study of equity and bond markets," NBER Working Papers 18028, National Bureau of Economic Research, Inc.
    5. Sonsoles Gallego & Sándor Gardó & Reiner Martin & Luis Molina & José María Serena, 2010. "The Impact of the Global Economic and Financial Crisis on Central Eastern and SouthEastern Europe (CESEE) and Latin America," Occasional Papers 1002, Banco de España;Occasional Papers Homepage.
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