The Global Financial Crisis: Explaining Cross-Country Differences in the Output Impact

By P. Berkmen, Gaston Gelos, R. Rennhack, James Walsh. Social Science Research Network, 2012

351 citations recorded by the source corpus.

What explains differences in the crisis impact across developing countries and emerging markets? Using cross-country regressions to assess the factors driving the growth performance in 2009 (compared to pre-crisis forecasts for that year), we find that a small set of variables explain a large share of the variation in the growth impact. Countries with more leveraged domestic financial systems, stronger credit growth, and more short-term debt tended to suffer a larger effect on economic activity, although the relative importance of these factors differs across country groups. For emerging markets, this financial channel trumps the trade channel. For a broader set of developing countries, however, the trade channel seems to have mattered, with more open countries affected more strongly and those exporting food commodities being less hard hit. Exchange-rate flexibility helped in buffering the impact of the shock, particularly for emerging markets. There is also some evidence that countries with a stronger fiscal position prior to the crisis were impacted less severely. We find little evidence for the importance of other policy variables.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/d12dafc3cd83e50a2e13dedabdda7a454e8ffa9c

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Citations in the corpus

Can Leading Indicators Assess Country Vulnerability? Evidence from the 2008-09 Global Financial Crisis (2012, background): “Berkmen et al. (2009) measured crisis incidence differently, as the change in 2009 growth forecasts by professional economists before and after the crisis hit.”
Stories of the Twentieth Century for the Twenty-First (2011, neutral): “(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 Milesi-Ferretti (2011), and Rose and Spiegel (2009), Rose and Spiegel (2010), Rose and Spiegel (2011). (53)These broad g”
Bank Capital Redux: Solvency, Liquidity, and Crisis (2017, neutral): “(2011) and Berkmen et al. (2012) on the global financial crisis and adds nuance to the characterization of financial crisis recoveries reported by Jordà et al.”
Are Leading Indicators of Financial Crises Useful for Assessing Country Vulnerability? Evidence from the 2008-09 Global Crisis (2010, methodology): “Appendix 1 Criteria Used to Identify Variable as Significant in Table 1 Study Criteria used/Variables Included Studies in Abiad (2003) Berg and Pattillo (1999b) Indicators that are statistically signficant in 2 out of the 3 probit models used Bruggemann and Linne (2000) No statistical test on indivi”