Flexibility of Adjustment to Shocks: Economic Growth and Volatility of Middle-Income Countries Before and After the Global Financial Crisis of 2008
Aizenman, Joshua; Jinjarak, Yothin; Estrada, Gemma; Tian, Shu | November 2017
Abstract
The pronounced and persistent impact of the global financial crisis of 2008 motivates our empirical analysis of the role of institutions and macroeconomic fundamentals on countries’ adjustment to shocks. Our empirical analysis shows that the associations of growth level, growth volatility, shocks, institutions, and macroeconomic fundamentals have changed in important ways after the crisis. Gross domestic product growth across countries has become more dependent on external factors, including global growth, global oil prices, and global financial volatility. After accounting for the effects global shocks, we find that several factors facilitate adjustment to shocks in middle-income countries. Educational attainment, share of manufacturing output in gross domestic product, and exchange rate stability increase the level of economic growth, while exchange rate flexibility, education attainment, and lack of political polarization reduce the volatility of economic growth. Countries cope with shocks better in the short to medium term by using appropriate policy tools and having good long-term fundamentals.
Citation
Aizenman, Joshua; Jinjarak, Yothin; Estrada, Gemma; Tian, Shu. 2017. Flexibility of Adjustment to Shocks: Economic Growth and Volatility of Middle-Income Countries Before and After the Global Financial Crisis of 2008. © Asian Development Bank. http://hdl.handle.net/11540/7722. License: CC BY 3.0 IGO.ISSN
2313-6537 (Print)
2313-6545 (electronic)
Keywords
Social condition
Economic dependence
Economic assistance
International monetary relations
International monetary relations
International trade
National accounting
Market
Project impact
Development projects
Program management
Performance appraisal
Project appraisal
Technology assessment
Macroeconomic
Macroeconomic Analysis
Macroeconomic Framework
Macroeconomic Models
Macroeconomic Performance
Macroeconomic Planning
Macroeconomic Policies
Macroeconomic Reform
Macroeconomic Stabilization
Results-Based Monitoring And Evaluation
Project Evaluation & Review Technique
Project Evaluation
Program Evaluation
Performance Evaluation
Operations Evaluation
Evaluation Methods
Evaluation
Exports
Exchange
Comparative economics
Index number
Monetary policy
Value analysis
Adjustment cost
Transaction cost
Conditionality
International relations
Cumulative effects assessment
Grievance procedures
Participatory monitoring and evaluation
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