Emerging economies in the 2000s: Real decoupling and financial recoupling

Eduardo Levy Yeyati and Tomas Williams

Journal of International Money and Finance, 2012, vol. 31, issue 8, 2102-2126

Abstract: The paper documents an intriguing development in the emerging world in the 2000s: a decoupling from the business cycle of advanced countries, combined with the strengthening of the co-movements in the main emerging market assets that predates the synchronized selloff during the crisis. In addition, the paper tests the hypothesis that financial globalization, to the extent that it creates a common, global investor base for EM, could lead to a tighter asset correlation despite the weaker economic ties. While an examination of the impact of alternative financial globalization proxies yield no conclusive result, a closer look at global emerging market equity and bond funds show that the latter indeed foster financial recoupling during downturns, reflecting the fact that they trade near their respective benchmarks and respond to withdrawals by liquidating holdings across the board.

Keywords: Real decoupling; Financial recoupling; Emerging markets; Contagion; Financial globalization; Benchmarking; Global mutual funds (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560612000964
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Emerging economies in the 2000s: real decoupling and financial recoupling (2012)
Working Paper: Emerging economies in the 2000s:Real decoupling and financial recoupling (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:31:y:2012:i:8:p:2102-2126

DOI: 10.1016/j.jimonfin.2012.05.005

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().