Understanding Differences in Growth Performance in Latin America and Developing Countries between the Asian and Global Financial Crises

Available from: 
November 2014
Paper author(s): 
Roberto Alvarez
José De Gregorio
Financial Economics
Macroeconomics - Economic growth - Monetary Policy

Latin American performance during the global financial crisis was unprecedented. Many developing and emerging countries successfully weathered the worst crisis since the Great Depression. Was it good luck? Was it good policies? In this paper we compare growth during the Asian and global financial crises and find that a looser monetary policy played an important role in mitigating crisis. We also find that higher private credit, more financial openness, less trade openness, and greater exchange rate intervention worsened economic performance. Our analysis of Latin American countries confi rms that eff ective macroeconomic management was key to good economic performance. Finally, we present evidence from a sample of 31 emerging markets that high terms of trade had a positive impact on resilience.


Research section: 
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