The role of domestic fundamentals on the economic vulnerability of emerging markets

Katia Rocha and Ajax Moreira ()

Emerging Markets Review, 2010, vol. 11, issue 2, 173-182

Abstract: This paper empirically evaluates policies that can potentially reduce the economic vulnerability of emerging market economies. Through panel data estimation on a group of 23 countries, we relate sovereign spreads to global risk shocks, and explore the argument suggested by Calvo (2003) which focuses on macroeconomic fundamentals as multipliers of external shocks. The results support policies towards financial liberalization, public debt management, consistent economic growth, development of the domestic financial market and improvements in governance indicators. We argue that those policies were crucial for the projected rapid economic rebound of the emerging market economies facing the global crisis of 2007-2009.

Keywords: Sovereign; spreads; Economic; vulnerability; Emerging; markets; Global; risk; aversion (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:11:y:2010:i:2:p:173-182

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