The Initial Impact of the Crisis on Emerging Market Countries

By Olivier J. Blanchard, M. Das, Hamid Faruqee. 2010

313 citations recorded by the source corpus.

To understand the diverse impact of the crisis across emerging market countries, we explore the role of two shocks—the collapse in trade and the sharp decline in financial flows—in the transmission of the crisis from the advanced economies. We first develop a simple open economy model, which allows for imperfect capital mobility and potentially contractionary effects of currency depreciation due to foreign debt exposure. We then look at the cross-country evidence. The data suggest a strong role for both trade and financial shocks. Perhaps surprisingly, the data give little econometric support for a central role of either reserves or exchange rate regimes. We end by presenting case studies for Latvia, Russia, and Chile.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/50646d015628070dcc29b1906527b9160bc7200d

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Citations in the corpus

The Great Retrenchment: International Capital Flows During the Global Financial Crisis (2011, unknown): “Ghosh et al. (2009) and Blanchard et al. (2010) focus on emerging economies and document how these were exposed through trade to the collapse of domestic demand in advanced economies, and experienced a “sudden stop” in capital inflows in the context of a generalized “flight to safety.””
Global Waves of Debt: Causes and Consequences (2021, background): “, Colombia and Indonesia in the first wave, India and Brazil in the second, and Poland and Chile in the third (Blanchard et al. 2010).”
Stories of the Twentieth Century for the Twenty-First (2011, unknown): “…reserves would have mitigated 52A partial list of contributions includes Chamon et al. (2012), Berglöf et al. (2010), Berkmen et al. (2009), Blanchard et al. (2010), Claessens et al. (2010), Frankel and Saravelos (2010), Giannone et al. (2011), International-Monetary-Fund (2010), Lane and…”
(Why) Should Current Account Balances Be Reduced? (2011, background): “8In the recent crisis, for example, the evidence points to high precrisis short-term debt as having been particularly costly in terms of output for emerging markets (Blanchard, Das, and Faruqee, 2010).”
From the Financial Crisis to the Real Economy: Using Firm-Level Data to Identify Transmission Channels (2012, background): “For example, Claessens et al (2010), Blanchard et al (2010), and Cetorelli and Goldberg (2009) document some evidence that countries more integrated with global financial markets suffered more during this crisis.2 In contrast, Rose and Spiegel (2010a, 2010b and 2011) fail to find strong evidence…”
Post-Mortem Examination of the International Financial Network (2012, unknown): “…that has flourished in the last couple of years, aiming at explaining the cross-sectional difference in crisis intensity (see Berkmen et al., 2009; Blanchard et al., 2010; Claessens et al., 2010; Rose and Spiegel, 2010, 2011; Frankel and Saravelos, 2011; Lane and Milesi-Ferretti, 2011; Giannone…”
How Resilient and Countercyclical Were Emerging Economies to the Global Financial Crisis? (2012, unknown): “incidence in terms of changes in GDP growth (Blanchard et al., 2010; Claessens et al., 2010; Lane and Milesi-Ferretti, 2010), we identify a non-linearity between the collapse in GDP growth”