Spillovers to Low-Income Countries: Importance of Systemic Emerging Markets
IMF Working Papers, February 1, 2012
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Bibliographic details
- Authors: Era Dabla-Norris, Raphael A Espinoza, Sarwat Jahan
- Published: February 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463937102.001
Summary and research objectives
- Documents expanding economic linkages between low-income countries (LICs) and a narrow group of "Emerging Market leaders" that have become major players in regional and global trade and financial flows.
- Aims to quantify how foreign shocks transmit to LIC growth and to identify the channels and heterogeneity across regions and production structures.
Methodology
- Uses Vector Autoregression (VAR) models to assess how linkages have changed the share of growth volatility in LICs attributable to foreign shocks.
- Employs dynamic panel models to analyze the impact of LIC trade orientation and production structure on sensitivity to foreign shocks.
Key empirical findings
- VAR results: Linkages with Emerging Market leaders have increased the share of growth volatility in LICs that can be attributed to foreign shocks.
- Dynamic panel results:
- The elasticity of LIC growth to trading partners' growth is high for LICs in:
- Asia
- Latin America and the Caribbean
- Europe and Central Asia
- For commodity-exporting LICs in:
- Sub-Saharan Africa
- Middle East and North Africa (MNA region)
- The main channels of transmission of foreign shocks are terms of trade shocks and demand from the emerging market leaders.
Data and publication metadata
- Authors: Era Dabla-Norris, Raphael A Espinoza, Sarwat Jahan
- Date: February 1, 2012
- Series: IMF Working Paper No. 2012/049
- Issue: 049
- Volume: 2012
- Pages: 27
- DOI: https://doi.org/10.5089/9781463937102.001
- Stock No: WPIEA2012049
- ISBN: 9781463937102
- ISSN: 1018-5941
Source: IMF Working Paper "Spillovers to Low-Income Countries: Importance of Systemic Emerging Markets" (2012/049), Era Dabla-Norris, Raphael A Espinoza, Sarwat Jahan.