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Domestic Amplifiers of External Shocks: Growth Accelerations and Reversals in Emerging Market and Developing Economies

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  • Bertrand Gruss
  • Mr. Malhar S Nabar
  • Mr. Marcos Poplawski Ribeiro

Abstract

External conditions have been found to influence the tendency of emerging market and developing economies to experience episodes of growth accelerations and reversals. In this paper we study the role of domestic policies and other structural attributes in amplifying or mitigating the effect that shifts in external conditions have on growth patterns in emerging market and developing economies over the past five decades. We find that these economies can enhance the growth impulse from external conditions by strengthening their institutional frameworks and adopting a policy mix that protects trade integration; permits exchange rate flexibility; and ensures that vulnerabilities stemming from high current account deficits and external debt, as well as high public debt, are contained.

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  • Bertrand Gruss & Mr. Malhar S Nabar & Mr. Marcos Poplawski Ribeiro, 2019. "Domestic Amplifiers of External Shocks: Growth Accelerations and Reversals in Emerging Market and Developing Economies," IMF Working Papers 2019/128, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2019/128
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    1. George ANTON, 2022. "The importance of demand, uncertainty and monetary policy shocks from the euro area for the Romanian economy," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(631), S), pages 25-38, Summer.

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    Keywords

    WP; domestic policy; terms of trade;
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