Emerging market fluctuations: what makes the difference ?

Constantino Hevia

No 4897, Policy Research Working Paper Series from The World Bank

Abstract: Aggregate fluctuations in emerging countries are quantitatively larger and qualitatively different in key respects from those in developed countries. Using data from Mexico and Canada, this paper decomposes these differences in terms of shocks to aggregate efficiency and shocks that distort the decisions of households about how much to invest, consume, and work in a standard model of a small open economy. The decomposition exercise suggests that most of these differences are explained by fluctuations in aggregate efficiency, distortions in labor decisions over the business cycle, and, most importantly, fluctuations in country risk. Other distortions are quantitatively less important.

Keywords: Economic Theory&Research; Political Economy; Emerging Markets; Currencies and Exchange Rates; Investment and Investment Climate (search for similar items in EconPapers)
Date: 2009-04-01
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Journal Article: Emerging market fluctuations: What makes the difference? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4897

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