Why Growth Performance Differed across Countries in the Recent Crisis: the Impact of Pre-crisis Conditions

Karl Aiginger

Review of Economics & Finance, 2011, vol. 1, 35-52

Abstract: The growth performance of countries proved to be very different during the recent financial crisis. The objective of the paper is to investigate why, despite the fact that the crisis hit countries simultaneously, the length and depth of the crisis turned out to be very different across countries. We apply principal component analysis to derive a single indicator for growth performance which includes different aspects of GDP dynamics before and after the crisis. Then we apply multivariate regressions analysis to analyze whether pre-crisis economic conditions and/or structural characteristics can explain the differences in growth performance in a sample of 37 countries. We focus primarily on industrialized countries but also include dynamic emerging economies. The pre-crisis conditions we investigate include the fiscal situation, trade competitiveness, output and credit growth; the structural characteristics we selected were country size, openness, the share of specific sectors and per capita income. The three indicators which proved to explain most robustly the cross country differences in the recent crisis and thus could also be used as predictors for future crises are the current account position, credit growth and GDP growth in the run-up period. Trade competitiveness improved the performance in the crisis. Past credit and GDP growth impaired country performance.

Keywords: Financial crisis; Cross country performance; Trade competitiveness (search for similar items in EconPapers)
JEL-codes: E20 E30 E32 E44 E60 G18 G28 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://www.bapress.ca/Journal-4/Why%20Growth%20Per ... sis%20Conditions.pdf (application/pdf)

Related works:
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:bap:journl:110403

Ordering information: This journal article can be ordered from
17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada

Access Statistics for this article

Review of Economics & Finance is currently edited by H. Carlson

More articles in Review of Economics & Finance from Better Advances Press, Canada 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada.
Bibliographic data for series maintained by Carlson ( this e-mail address is bad, please contact ).