Publication: Severity of the Crisis and its Transmission Channels
Date
2009-12
ISSN
Published
2009-12
Author(s)
Abstract
The current global crisis, although
initially circumscribed to the US housing market, spread
rapidly across markets and borders. It has affected almost
all countries through different reinforcing channels: the
contraction in international trade, capital flows,
remittances, and international commodity prices. The main
goal of this note is to empirically analyze the mechanisms
through which the financial crisis of 2007-2009 propagated
throughout the world by characterizing the main factors
behind the fall in Gross Domestic Product (GDP) growth
rates. The findings indicate that a greater decline in the
growth rate was registered in countries with higher de facto
trade openness, less resilient domestic financial markets,
and, to a lesser extent, improved macroeconomic frameworks.
To complement this evidence, we construct an aggregate index
of the severity of the crisis that captures the real and
financial consequences in each country of this unprecedented
global financial shock.
Citation
“Calderon, Cesar; Didier, Tatiana. 2009. Severity of the Crisis and its Transmission Channels. Latin America and the Caribbean Region (LCR) Crisis Briefs. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/858cfe6c-1f35-5169-ac7b-1fb8d86e7680 License: CC BY 3.0 IGO.”