This project seeks to understand the impact on emerging market economies (EMEs) of the 2007-09 global financial crisis, contrasting the recent crisis with past EME financial crises, as well as with crises that have hit the advanced economies (AEs) in recent past decades. We ask if there are substantive differences between the preludes and aftermaths of various types of crises in EMEs versus AEs, and if the most recent crisis, in which some emerging regions displayed considerable resilience, differs from past ones. We deploy a new panel regression-based methodology for isolating the salient behaviors of key macro variables before, during, and after three distinct (but sometimes related) types of crisis – sovereign default crises, banking crises, and currency crises. The policy goal is to understand the macro developments that typically precede crises, as well as to understand the economic factors that might aggravate or mitigate crisis severity. A particular focus is on the role of net and gross international financial flows and the current account balance as indicators of crisis vulnerability.
Obstfeld, M. Linkages among Capital Flows, Trade, and Growth in Developing Economies (Policy Brief). (2009) 3 pp.