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The End of An Era? the Medium- and Long-Term Effects of the Global Crisison Growth in Low-Income Countries
Author:
Mr. Chris Papageorgiou
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,
Mr. Andrew Berg
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,
Ms. Catherine A Pattillo
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, and
Mr. Nikola Spatafora
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Series:
IMF Working Papers
Volume/Issue:
Volume 2010: Issue 205
Language:
English
Publication Date:
01 Sep 2010
DOI:
https://doi.org/10.5089/9781455205363.001
ISBN:
9781455205363
ISSN:
1018-5941
Pages:
29
Keywords:
WP; crisis; TOT shock; Low-income country; TOT growth
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper investigates the medium- and long-term growth effects of the global financial crises on Low-Income Countries (LICs). Using several methodological approaches, including impulse response function analysis, growth spells techniques and panel regressions, we show that external demand (ED) shocks are not historically associated with sharp declines in output growth. Given existing evidence that LICs were primarily impacted by such a shock in the global financial crisis, our analysis provides some optimism on the chances that LICs will avoid a protracted period of slow growth. However, we also show that there seem to be persistent output losses associated with ED shocks in the medium-run. In terms of policy implications, our analysis provides evidence that countries with lower deficits, lower debt, more flexible exchange rate regimes, and a higher stock of international reserves are more likely to dampen the effects of an ED shock on growth.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund