Flexibility of Adjustment to Shocks: Economic Growth and Volatility of Middle-Income Countries Before and After the Global Financial Crisis of 2008

Joshua Aizenman, Yothin Jinjarak, Gemma Estrada, Shu Tian

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

Our analysis shows that the associations of growth level, growth volatility, shocks, institutions, and macroeconomic fundamentals have changed in important ways after the 2008 global financial crisis. Economic 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; although, exchange rate flexibility, education attainment, and lack of political polarization reduce the volatility of economic growth.

Original languageEnglish
Pages (from-to)1112-1131
Number of pages20
JournalEmerging Markets Finance and Trade
Volume54
Issue number5
DOIs
StatePublished - 9 Apr 2018
Externally publishedYes

Keywords

  • growth
  • institutions
  • middle-income
  • shocks
  • volatility

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