The end of an era? The medium- and long-term effects of the global crisis on growth in low-income countries

Andrew Berg (), Chris Papageorgiou (), Catherine Pattillo and Nicola Spatafora

No 25, IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth from Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO)

Abstract: This paper investigates the medium- and long-term growth effects of the global financial crises on Low-Income Countries (LICs). Using several methodological approaches, including impulse response function analysis, growth spells techniques and panel regressions, we show that external demand (ED) shocks are not historically associated with sharp declines in output growth. Given existing evidence that LICs were primarily impacted by such a shock in the global financial crisis, our analysis provides some optimism on the chances that LICs will avoid a protracted period of slow growth. However, we also show that there seem to be persistent output losses associated with ED shocks in the medium-run. In terms of policy implications, our analysis provides evidence that countries with lower deficits, lower debt, more flexible exchange rate regimes, and a higher stock of international reserves are more likely to dampen the effects of an ED shock on growth.

Keywords: Global financial crisis; external shocks; low-income countries; medium- and long-term growth; impulse response functions; growth spells; panel growth regressions (search for similar items in EconPapers)
JEL-codes: O11 O19 O23 O47 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-fdg and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The End of An Era? the Medium- and Long-Term Effects of the Global Crisison Growth in Low-Income Countries (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iamo11:25

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