Calderon, CesarDidier, Tatiana2012-08-132012-08-132009-12https://hdl.handle.net/10986/10946The 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.CC BY 3.0 IGOADVANCED ECONOMIESAGGREGATE DEMANDANNUAL GROWTHANNUAL GROWTH RATEASSET VALUESAVERAGE GROWTHBANKING SYSTEMBUDGET DEFICITSBUSINESS CYCLECAPITAL FLOWCAPITAL FLOWSCAPITAL INFLOWSCENTRAL BANKSCOMMODITYCOMMODITY PRICESCONSENSUS FORECASTCONSENSUS FORECASTSCORRELATION ANALYSISCOUNTRY CREDITCREDIT GROWTHCREDIT INTERMEDIATIONCREDIT RATINGCURRENCYDEBTDEBT FLOWSDECELERATION IN GROWTHDEPENDENT VARIABLEDEPOSITDEVELOPING COUNTRIESDOMESTIC CREDITDOMESTIC CURRENCIESDOMESTIC DEMANDDOMESTIC FINANCIAL MARKETSDOMESTIC FINANCIAL SECTORECONOMIC CONSEQUENCESECONOMIC OUTLOOKEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET ECONOMIESEMPIRICAL EVIDENCEEMPIRICAL STUDIESEQUITY HOLDINGSEXCHANGE RATEEXCHANGE RATE FLEXIBILITYEXCHANGE RATESEXPORTERSEXPORTSEXPOSUREEXTERNAL ASSETSEXTERNAL DEMANDEXTERNAL IMBALANCESEXTERNAL SHOCKSFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL CRISESFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIATIONFINANCIAL MARKETFINANCIAL OPENNESSFINANCIAL POLICIESFINANCIAL SAVINGSFINANCIAL SECTORFINANCIAL SHOCKFINANCIAL SYSTEMFINANCIAL SYSTEMSFISCAL POLICIESFISCAL POLICYFORECASTSFOREIGN FUNDSFOREIGN LIABILITIESFOREIGN TRADEGDPGDP PER CAPITAGOVERNMENT EXPENDITURESGOVERNMENT REVENUESGROWTH RATEGROWTH RATESINCOMEINCOME LEVELINDEPENDENT VARIABLESINDUSTRIAL ECONOMIESINFLATIONINFLATION RATESINSTITUTIONAL INVESTORINTERNATIONAL ECONOMICSINTERNATIONAL MARKETINTERNATIONAL TRADELOANLONG RUNMACROECONOMIC FRAMEWORKMACROECONOMIC POLICIESMACROECONOMIC POLICYMACROECONOMICSMARKET FINANCEMIDDLE INCOME COUNTRIESMONETARY AREAMONETARY FRAMEWORKSMONETARY POLICYNON-PERFORMING LOANSOPTIMUM CURRENCY AREAPORTFOLIOPRICE INDEXPRIVATE CONSUMPTIONPROTECTIONISMREAL ECONOMIC ACTIVITYREAL EFFECTIVE EXCHANGE RATEREAL EXCHANGE RATEREAL GDPREAL GROWTH RATESREMITTANCESRICH COUNTRIESSCATTER PLOTSHARE OF EQUITYSIGNIFICANT EFFECTSTOCK MARKETSTOCK MARKET CAPITALIZATIONSTOCK MARKET PRICESSTOCK MARKETSSTOCK PRICESTOCK PRICESSTOCKSTOTAL EXPORTSTRADE CREDITTRADE LIBERALIZATIONTRADE OPENNESSTRADE REGIMESTRADE VOLUMESTRADINGTRADING PARTNERSTROUGHVOLATILITYWORLD ECONOMYWorld Bank10.1596/10946