Calderón, CesarFuentes, Rodrigo2012-03-192012-03-192010-06-01https://hdl.handle.net/10986/3829Using the dating algorithm by Harding and Pagan (2002) on a quarterly database for 23 emerging market economies (EMEs) and 12 developed countries over the period 1980.Q1 - 2006.Q2, the authors proceed to characterize and compare the business cycle features of these two groups. They first find that recessions are deeper and more frequent among EMEs (especially, among LAC countries) and that expansions are more sizable and longer (especially, among East Asian countries). After this characterization, this paper explores the linkages between the cost of recessions (as measured by the average annual rate of output loss in the peak-to-trough phase of the cycle) and several country-specific factors. The main findings are: (a) adverse terms of trade shocks raises the cost of recessions in countries with a more open trade regime, deeper financial markets and, surprisingly, a more diversified output structure. (b) U.S. interest rate shocks seem to have a significant impact on the cost of recessions in East Asian countries. (c) Recessions tend to be deeper if they coincide with a sudden stop, but the effect tends to be mitigated in countries with deeper domestic credit markets. (d) Countries with stronger institutions tend to have less costly recessions.CC BY 3.0 IGOACCOUNTINGADJUSTMENT COSTSADVERSE REAL SHOCKSAUDIT COMMITTEEBANK POLICYBANKING CRISISBANKRUPTCYBANKRUPTCY LAWSBANKRUPTCY PROCEDURESBILLBUSINESS CYCLEBUSINESS CYCLESBUSINESS REGULATIONSCAPITAL ACCOUNTCAPITAL FLOWSCAPITAL INFLOWSCAPITAL MARKETCAPITAL MARKET DEVELOPMENTCENTRAL BANKCLAIMANTSCOLLATERALCOMMODITYCOMMODITY PRICESCONTRACT ENFORCEMENTCONTROL VARIABLESCOUNTRY RISKCREDIT CONSTRAINTSCREDIT HISTORIESCREDIT INFORMATIONCREDIT INFORMATION REGISTRIESCREDIT MARKETCREDIT MARKETSCREDIT RATINGSCREDITORSCURRENCYCURRENCY CRISISCURRENCY OVERVALUATIONCURRENT ACCOUNTCURRENT ACCOUNT BALANCESCYCLICAL FLUCTUATIONSCYCLICAL SHOCKSDEBTDEBT CRISISDEBTORSDEPENDENT VARIABLEDEPOSITDEPOSIT MONEY BANKSDEPRECIATIONDERIVATIVEDESCRIPTIVE STATISTICSDEVELOPING COUNTRIESDEVELOPING ECONOMIESDISTORTIONSDOMESTIC CREDITDOMESTIC CURRENCYDOMESTIC ECONOMYDOMESTIC FINANCIAL MARKETDOMESTIC FINANCIAL MARKETSDOMESTIC FINANCIAL SYSTEMDUMMY VARIABLEDUMMY VARIABLESECONOMIC CRISISECONOMIC GROWTHECONOMIC POLICIESECONOMIC REFORMSEMERGING ECONOMIESEMERGING MARKETEMERGING MARKET COUNTRIESEMERGING MARKET ECONOMIESEMERGING MARKET ECONOMYEMERGING MARKETSEXCHANGE RATEEXCHANGE RATE ARRANGEMENTSEXCHANGE RATE REGIMEEXCHANGE RATE REGIMESEXCHANGE RATESEXOGENOUS SHOCKSEXPANSIONARY PHASEEXPANSIONARY PHASESEXPLANATORY VARIABLEEXPLANATORY VARIABLESEXPROPRIATIONEXTERNAL DEMANDEXTERNAL FACTORSEXTERNAL SHOCKSFACTOR MARKETSFEDERAL RESERVEFEDERAL RESERVE SYSTEMFINANCIAL DEVELOPMENTFINANCIAL FLOWSFINANCIAL INFORMATIONFINANCIAL INSTITUTIONSFINANCIAL INTEGRATIONFINANCIAL MARKETSFINANCIAL OPENNESSFINANCIAL SHOCKSFINANCIAL SYSTEMFIXED EXCHANGE RATEFIXED EXCHANGE RATE REGIMESFLEXIBLE EXCHANGE RATEFLEXIBLE EXCHANGE RATE REGIMESFLEXIBLE EXCHANGE RATESFLEXIBLE RATESFLOATING EXCHANGE RATEFLOATING EXCHANGE RATE REGIMESFORECLOSUREFOREIGN INTERESTFOREIGN INTEREST RATEFOREIGN INTEREST RATESGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELGENERAL EQUILIBRIUM MODELSGLOBAL LIQUIDITYGLOBALIZATIONGOVERNMENT POLICYGROSS DOMESTIC PRODUCTGROSS NATIONAL INCOMEGROWTH RATESIMBALANCESINDUSTRIAL COUNTRIESINFLATIONINFLATION RATEINSURANCEINTEREST RATEINTEREST RATE CAPSINTEREST RATE SHOCKSINTERNATIONAL BANKINTERNATIONAL ECONOMICSINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL FINANCIAL STATISTICSINTERNATIONAL MARKETSINTERNATIONAL TRADEINVESTMENT FLOWJUDICIAL PROCESSLABOR MARKETLABOR MARKETSLEGAL PROTECTIONLEGAL RIGHTLEGAL RIGHTSLEGAL SYSTEMSLENDERSLESS DEVELOPED ECONOMIESLEVYLIQUID ASSETSLIQUIDITYLIQUIDITY CONDITIONSLOCAL CURRENCYMACROECONOMIC FLUCTUATIONSMACROECONOMIC INSTABILITYMACROECONOMIC POLICIESMACROECONOMIC POLICYMACROECONOMIC STABILITYMACROECONOMIC VOLATILITYMONETARY ECONOMICSMONEY MARKETMONEY MARKET RATENATURAL DISASTERSNEGATIVE SHOCKSNOTARIESOPEN ECONOMIESOPEN ECONOMYOPTIMUM CURRENCY AREAOUTPUTOUTPUT LOSSOUTPUT LOSSESOUTPUTSPERMANENT INCOME HYPOTHESISPOLITICAL ECONOMYPOLITICAL RISKPOTENTIAL INVESTORSPRIVATE CREDITPUBLIC REGISTRIESRANDOM WALKREAL EXCHANGE RATEREAL EXCHANGE RATE OVERVALUATIONREAL INTERESTREAL INTEREST RATESREAL MONEY MARKET RATEREAL SHOCKSRECESSIONRECESSIONSREGRESSION ANALYSISREGULATORY FRAMEWORKRESERVE BANKRISK PREMIUMRISK SHARINGSAVINGSSCATTER PLOTSSHAREHOLDERSSLOWDOWNSLOWDOWNSSMALL BUSINESSESSTANDARD DEVIATIONSTEADY STATESUPPLY SHOCKTAXTRADE DEFICITTRADE OPENNESSTRADE POLICYTRADE REGIMETRADE SHOCKTRADE SHOCKSVALUATIONWORKING CAPITALWORLD ECONOMYWORLD INTEREST RATESWorld Bank10.1596/1813-9450-5343