From the Great Moderation to the Global Crisis: Exchange Market Pressure in the 2000s

Joshua Aizenman, Jaewoo Lee () and Vladyslav Sushko

Open Economies Review, 2012, vol. 23, issue 4, 597-621

Abstract: We study exchange market pressures (EMP) and using international reserves by emerging markets (EMs) during the 2000s. We find that financial considerations dominated trade factors. The impact of gross short-term external debt quintuples during the crisis. Capital outflows and deleveraging was the force behind EMP rise during the global financial crisis. Greater FDI (greater portfolio debt) inflows prior to the crisis were associated with a lower (higher) crisis EMP, respectively. The severity of the financial shock was exacerbated by financial ties to the U.S., while the trade shock was more severe in EMs with a larger commodity export share. Copyright Springer Science+Business Media, LLC 2012

Keywords: Exchange market pressure; Financial and trade factors; International reserves; Global crisis; F15; F21; F31; F32 (search for similar items in EconPapers)
Date: 2012
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Working Paper: From the Great Moderation to the global crisis: Exchange market pressure in the 2000s (2010)
Working Paper: From the Great Moderation to the global crisis: Exchange market pressure in the 2000s (2010)
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DOI: 10.1007/s11079-011-9228-y

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