Emerging Market Fluctuations : What Makes the Di erence?
Aggregate fluctuations in emerging countries are quantitatively larger and qualitatively different in key respects from those in developed countries. Using data from Mexico and Canada, this paper decomposes these differences in terms of shocks to a...
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Format: | Policy Research Working Paper |
Language: | English |
Published: |
2012
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Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090408124920 http://hdl.handle.net/10986/4091 |
Summary: | Aggregate fluctuations in emerging
countries are quantitatively larger and qualitatively
different in key respects from those in developed countries.
Using data from Mexico and Canada, this paper decomposes
these differences in terms of shocks to aggregate efficiency
and shocks that distort the decisions of households about
how much to invest, consume, and work in a standard model of
a small open economy. The decomposition exercise suggests
that most of these differences are explained by fluctuations
in aggregate efficiency, distortions in labor decisions over
the business cycle, and, most importantly, fluctuations in
country risk. Other distortions are quantitatively less important. |
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