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

Working Paper
November 2014

Latin America's economic performance during the global financial crisis was unprecedented. Many developing and emerging-market countries successfully weathered the worst crisis since the Great Depression. Was it good luck? Was it good policies? Alvarez and De Gregorio compare growth during the Asian and global financial crises and find that a looser monetary policy played an important role in mitigating crisis and that higher private credit, more financial openness, less trade openness, and greater exchange rate intervention worsened economic performance. Their analysis of Latin American countries confirms that effective macroeconomic management was key to good economic performance. They also present evidence from a sample of 31 emerging markets that high terms of trade made these countries more resilient.

Data disclosure: The data underlying this analysis are available here [zip].