Emerging Asia: Decoupling or Recoupling

By Soyoung Kim, Jong‐Wha Lee, Cyn-Young Park. 2011

143 citations recorded by the source corpus.

In this paper, we investigate the degree of real economic interdependence between emerging Asia and major industrial countries to shed light on the heated debate over the “decoupling” of emerging Asia. We first document the evolution of macroeconomic interdependence for emerging Asian economies through changing trade and financial linkages at both the regional and global levels. Then, by employing a panel vector autoregression (VAR) model, we estimate the degree of real economic interdependence before and after the 1997/98 Asian financial crisis. Empirical findings show that real economic interdependence increased significantly in the post-crisis period, suggesting “recoupling”, rather than decoupling, in recent years. Output shocks from major industrial countries have a significant positive effect on emerging Asian economies. More interestingly, the reverse is also true. Output shocks from emerging Asia (and the People’s Republic of China [PRC]) have a significant positive effect on output in major industrial countries. The result suggests that macroeconomic interdependence between emerging Asia and industrial countries has become “bi-directional,” defying the traditional notion of the “North–South relationship” as one of “uni-directional" dependence.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/547c6e75198a60bd29e0e3c425a0a0c3eff72de0

How researchers see this paper

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In Economics and Econometrics

1. Yuting Huang
2. K. Liow
3. Wen-Chi Liao

In Finance

1. Yuting Huang
2. K. Liow
3. Wen-Chi Liao

Citations in the corpus

• Dynamics of international spillovers and interaction: Evidence from financial market stress and economic policy uncertainty (2018, background): “Moreover, the growing influence of CH and the globalization of its financial markets are making fundamental changes to the nature of macroeconomic interdependence and economic spillovers between CH and the G7 countries (Kim et al., 2011).”