Understanding Differences in Growth Performance in Latin America and Developing Countries between the Asian and the Global Financial Crises

Latin American performance during the global financial crisis was unprecedented. Many developing and emerging countries successfully weathered the worst crisis since the Great Depression. Was it good luck? Was it good policies? This paper compares growth during the Asian and global financial crises....

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Bibliographic Details
Published in:IMF economic review 2014-11, Vol.62 (4), p.494-525
Main Authors: ALVAREZ, ROBERTO, DE GREGORIO, JOSÉ
Format: Article
Language:English
Subjects:
Analysis
Asians
Capital Markets
Commodities
Credit
Developing countries
E58
E63
Econometrics
Economic aspects
Economic conditions
Economic crisis
Economic development
Economic growth
Economic indicators
Economic Policy
Economics
Economics and Finance
Emerging markets
Finance
Fixed exchange rates
Foreign exchange
Foreign exchange markets
Foreign exchange rates
GDP
Gross Domestic Product
Growth
Inflation
International Economics
International finance
Latin America
LDCs
Macroeconomics
Macroeconomics/Monetary Economics//Financial Economics
Management
Market economies
Monetary policy
Prices
Prices and rates
Recessions
Studies
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Summary:Latin American performance during the global financial crisis was unprecedented. Many developing and emerging countries successfully weathered the worst crisis since the Great Depression. Was it good luck? Was it good policies? This paper compares growth during the Asian and global financial crises. It finds that a looser monetary policy played an important role in mitigating crisis. It also finds that higher private credit, more financial openness, less trade openness, and greater exchange rate intervention worsened economic performance. Better macroeconomic management was key to good economic performance, which is confirmed by our analysis of Latin American countries. Finally, there is also evidence for the sample of 31 emerging markets that high terms of trade had a positive impact on resilience.
ISSN:2041-4161
2041-417X
DOI:10.1057/imfer.2014.24