## Testing Shock Transmission Channels to Low-Income Developing Countries

_IMF Working Papers, May 23, 2016_

## Source details

**Canonical URL:** [Testing Shock Transmission Channels to Low-Income Developing Countries](https://www.imf.org/en/publications/wp/issues/2016/12/31/testing-shock-transmission-channels-to-low-income-developing-countries-43919)

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## Bibliographic details
- Authors: Nina Biljanovska, Alexis Meyer-Cirkel
- Published: May 23, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484364345.001

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### Overview and methods
- Authors: Nina Biljanovska, Alexis Meyer-Cirkel
- Date: May 23, 2016
- Frameworks used:
  - Global vector autoregressive (GVAR) framework
  - Country-specific error correction models
- Dataset compiled:
  - Bank credit, exports, output, and real effective exchange rate
  - 24 LIDCs and 16 Advanced and Emerging Markets
  - Accounting for 74 percent of World GDP
  - Sample period: 1990Q1 to 2013Q4

### Key findings
- Synchronization of business cycles:
  - Business cycles in oil- and commodity-exporting LIDCs are more synchronized with those in emerging market economies.
  - Frontier LIDCs also show greater synchronization with emerging market economies.
- Credit transmission:
  - Credit conditions in the US have a significant impact on exports and real economic activity in LIDCs.
  - Exports and real economic activity in LIDCs are basically unresponsive to credit availability in emerging markets or economies in other parts of the world.
- Impulse response analyses were the primary tool for assessing the dynamic responses.

### Subjects and keywords
- Subjects: Commodities, Credit, Emerging and frontier financial markets, Exports, Financial markets, Foreign exchange, International trade, Money, Oil, Real effective exchange rates
- Keywords: commodity-exporting LIDCs, Credit, credit condition, Emerging and frontier financial markets, export demand equation, export partner, export series, Exports, frontier LIDCs, Global, GVAR, LICS export destination share, Low-Income Countries, Oil, output fluctuation, Real effective exchange rates, trade export share, Transmission of Shocks, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/testing-shock-transmission-channels-to-low-income-developing-countries-43919_