{
  "title": "The Global Financial Crisis - Explaining Cross-Country Differences in the Output Impact",
  "publication": "IMF Working Papers, December 1, 2009",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/the-global-financial-crisis-explaining-cross-country-differences-in-the-output-impact-23438",
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  "summary": "We provide one of the first attempts at explaining the differences in the crisis impact across developing countries and emerging markets.",
  "sections": [
    {
      "heading": "Summary of purpose and approach",
      "content": "- One of the first attempts to explain differences in the crisis impact across developing countries and emerging markets.\n- Uses cross-country regressions to explain factors driving growth forecast revisions after the eruption of the global crisis.\n- Finds that a small set of variables explain a large share of the variation in growth revisions."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Financial sector characteristics:\n  - Countries with more leveraged domestic financial systems tended to suffer larger downward revisions to their growth outlooks.\n  - Countries with more rapid credit growth tended to suffer larger downward revisions to their growth outlooks.\n  - For emerging markets, the financial channel trumps the trade channel.\n- Trade channel:\n  - For a broader set of developing countries, the trade channel appears important.\n  - Countries exporting more advanced manufacturing goods were more affected than those exporting food.\n- Exchange-rate flexibility:\n  - Exchange-rate flexibility clearly helped in buffering the impact of the shock.\n- Fiscal position:\n  - There is some—weaker—evidence that countries with a stronger fiscal position prior to the crisis were hit less severely.\n- Other policy variables:\n  - Little evidence for the importance of other policy variables."
    },
    {
      "heading": "Methodological note",
      "content": "- Analysis based on cross-country regressions explaining growth forecast revisions following the global financial crisis."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Strengthening financial-sector resilience and monitoring credit growth are critical to reduce vulnerability to global shocks, especially for emerging markets where the financial channel dominated.\n- Exchange-rate flexibility can act as an effective shock absorber.\n- Fiscal strength prior to a shock may provide some protection, though evidence is weaker.\n- Trade composition matters for developing countries: reliance on advanced manufacturing exports increased exposure compared with food exporters.\n\nByGaston Gelos, Robert Rennhack, James P Walsh, Pelin Berkmen December 1, 2009\n\n---\n\n Content in this bundle\n\n- wp09280\n  - wp09280 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp09280 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-global-financial-crisis-explaining-cross-country-differences-in-the-output-impact-23438"
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    "Authors: Gaston Gelos, Robert Rennhack, James P Walsh, Pelin Berkmen",
    "Published: December 1, 2009",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451874259.001",
    "One of the first attempts to explain differences in the crisis impact across developing countries and emerging markets.",
    "Uses cross-country regressions to explain factors driving growth forecast revisions after the eruption of the global crisis.",
    "Finds that a small set of variables explain a large share of the variation in growth revisions.",
    "Financial sector characteristics:",
    "Trade channel:",
    "Exchange-rate flexibility:",
    "Fiscal position:",
    "Other policy variables:",
    "Analysis based on cross-country regressions explaining growth forecast revisions following the global financial crisis.",
    "Strengthening financial-sector resilience and monitoring credit growth are critical to reduce vulnerability to global shocks, especially for emerging markets where the financial channel dominated.",
    "Exchange-rate flexibility can act as an effective shock absorber.",
    "Fiscal strength prior to a shock may provide some protection, though evidence is weaker.",
    "Trade composition matters for developing countries: reliance on advanced manufacturing exports increased exposure compared with food exporters.",
    "**_wp09280**"
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