Abstract
Emerging economies have experienced a slower economic growth period in the aftermath of the global financial crisis. In this chapter we examine the important external and internal conditions that were effective in causing growth deterioration in emerging economies during the period 2013–2015. We utilize a pooled panel ordinary least squares (OLS) estimation using a sample containing 68 countries. Regarding the external conditions, emerging market economies experienced growth deceleration when (i) the current account deficit increased, (ii) trading partners’ import demand decreased, and (iii) the terms of trade deteriorated. Furthermore, we find that certain internal conditions, such as higher consumer prices, a more expansionary fiscal policy, more government borrowing, lower investment, and lower labor force participation, significantly contributed to the economic growth decline.
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Notes
- 1.
The financial openness indicator is based on the Chinn–Ito index, which measures a country’s capital account openness degree.
- 2.
The output gap is calculated by taking the difference between the 2012 real GDP growth and the projected 2012 real GDP growth based on the IMF WEO reports.
- 3.
- 4.
The cluster-robust VCE estimator is used for this estimation. The clustering variable is the countries.
- 5.
The 2012 exchange rate overvaluation data are missing for four countries: Ecuador, Estonia, the Slovak Republic, and Slovenia. Export growth and terms of trade data are also missing for Angola.
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Guleryuz, E.H. (2017). External Financial Conditions and Slower Growth in Emerging Economies: 2013–2015. In: Hacioğlu, Ü., Dinçer, H. (eds) Global Financial Crisis and Its Ramifications on Capital Markets. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-47021-4_13
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DOI: https://doi.org/10.1007/978-3-319-47021-4_13
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