[PDF] The Changing International Transmission Of Financial Shocks eBook

Author : Sandra Eickmeier
Publisher :
Page : 64 pages
File Size : 25,24 MB
Release : 2016
Category :
ISBN :

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1971-2009. Financial shocks are defined as unexpected changes of a financial conditions index (FCI), recently developed by Hatzius et al. (2010), for the US. We use a time-varying factor-augmented VAR to model the FCI jointly with a large set of macroeconomic, financial and trade variables for nine major advanced countries. The main findings are as follows. First, positive US financial shocks have a considerable positive impact on growth in the nine countries, and vice versa for negative shocks. Second, the transmission to GDP growth in European countries has increased gradually since the 1980s, consistent with financial globalization. A more marked increase is detected in the early 1980s in the US itself, consistent with changes in the conduct of monetary policy. Third, the size of US financial shocks varies strongly over time, with the `global financial crisis shock' being very large by historical standards and explaining 30 percent of the variation in GDP growth on average over all countries in 2008-2009, compared to a little less than 10 percent over the 1971-2007 period. Finally, large collapses in house prices, exports and TFP are the main drivers of the strong worldwide propagation of US financial shocks during the crisis.

Author : Nicola Cetorelli
Publisher : DIANE Publishing
Page : 41 pages
File Size : 50,88 MB
Release : 2010-11
Category : Business & Economics
ISBN : 1437933874

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Global banks played a significant role in transmitting the 2007-09 financial crisis to emerging-market (EM) economies. The authors examine adverse liquidity shocks on main developed-country banking systems and their relationships to EM across Europe, Asia, and Latin Amer., isolating loan supply from loan demand effects. Loan supply in EM across Europe, Asia, and Latin Amer. was affected significantly through three separate channels: (1) a contraction in direct, cross-border lending by foreign banks; (2) a contraction in local lending by foreign banks¿ affiliates in EM; and (3) a contraction in loan supply by domestic banks, resulting from the funding shock to their balance sheets induced by the decline in interbank, cross-border lending. Charts and tables.

Author : Laurent Ferrara
Publisher : Springer
Page : 300 pages
File Size : 48,18 MB
Release : 2018-06-13
Category : Business & Economics
ISBN : 3319790757

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This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.

Author : Mr.Luis Brandão Brandao Marques
Publisher : International Monetary Fund
Page : 38 pages
File Size : 45,12 MB
Release : 2013-07-03
Category : Business & Economics
ISBN : 1484397231

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This paper considers the role of country-level opacity (the lack of availability of information) in amplifying shocks emanating from financial centers. We provide a simple model where, in the presence of ambiguity (uncertainty about the probability distribution of returns), prices in emerging markets react more strongly to signals from the developed market, the more opaque the emerging market is. The second contribution is empirical evidence for bond and equity markets in line with this prediction. Increasing the availability of information about public policies, improving accounting standards, and enhancing legal frameworks can help reduce the unpleasant side effects of financial globalization.

Author : Satoshi Inomata
Publisher : Edward Elgar Publishing
Page : 225 pages
File Size : 44,3 MB
Release : 2011-01-01
Category : Business & Economics
ISBN : 0857930508

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The characteristic feature of the recent Global Economic Crisis is the speed and extent of the shock transmission. The development of cross-national production networks in recent years has significantly deepened the economic interdependency between countries, and a shock that occurs in one region can be swiftly and extensively transmitted to the rest of the globe. The sudden contraction of world trade and output is a negative outcome of this intertwined global economic system. Based on the method known as international input-output analyses, this book provides a detailed examination of the mechanics of shock transmission by probing the labyrinth of complex supply networks among nations.

Author : Steven Ongena
Publisher :
Page : 48 pages
File Size : 46,58 MB
Release : 2013
Category :
ISBN :

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We study the international transmission of shocks from the banking to the real sector during the global financial crisis. For identification, we use matched bank-firm level data, including many small and medium-sized firms, in Eastern Europe and Central Asia. We find that internationally-borrowing domestic and foreign-owned banks contract their credit more during the crisis than domestic banks that are funded only locally. Firms that are dependent on credit and at the same time have a relationship with an internationally-borrowing domestic or a foreign bank (as compared to a locally-funded domestic bank) suffer more in their financing and real performance. Single-bank-relationship firms, small firms and firms with intangible assets suffer most. For credit-independent firms, there are no differential effects. Our findings suggest that financial globalization has intensified the international transmission of financial shocks with substantial real consequences.

Author : Michael D. Bordo
Publisher :
Page : 56 pages
File Size : 31,71 MB
Release : 2002
Category : Economics
ISBN :

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In this paper we compare various characteristics of the cross-country transmission of shocks in the financial markets of both advanced and emerging countries during two periods of globalization -- the pre-World War I classical gold standard era, 1880-1914, and the post-Bretton Woods era, 1975-2000. Based on principal components analysis on monthly spreads on long-term sovereign bond yields and on an EMP measure of currency crises, an index of global stress, and impulse response functions from VARs estimated using weekly data on short-term interest rates, we conclude that financial market shocks were more globalized before 1914 compared to the present. We postulate that this difference in systemic stability between the two eras of globalization reflects factors such as strong cross-country interdependence fostered through links to gold, the growing financial maturity of advanced countries, and the widening of the center to include a more diverse group of countries spanning several regions.

Author : Maurice Obstfeld
Publisher : Edward Elgar Publishing
Page : 291 pages
File Size : 32,87 MB
Release : 2012-01-01
Category : Business & Economics
ISBN : 178100630X

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In 2008, the global economy experienced the most severe crash since World War II. A sharp collapse in international trade followed, leaving no country on the globe immune to a sequence of economic shocks. This timely book explores many of the key issues raised in the wake of the global economic crisis and provides an in-depth analysis of crisis transmission to emerging markets. The expert contributors compare the recent crisis with earlier crises, explore international aspects of the crisis from the perspectives of markets and trade, and examine macroeconomic policy responses. In so doing, they address important questions including: How did this crisis differ from those suffered previously? How and why did flaws in financial markets contribute to the crisis? How important were global imbalances and global overheating in explaining the global meltdown? Did different pre-crisis fundamentals generate different post-crisis performances? And, how severe were the economic shocks to countries such as Korea and other emerging economies? Academics, students and policymakers in the fields of economics, international economics, finance money and banking and Asian studies will find this book to be a thought-provoking and stimulating read.