Emerging markets are highly sensitive to output shocks: Central Bank of Chile paper


Emerging economies suffer much more severe falls in investment and private consumption following an output shock and take significantly longer to recover, according to a Central Bank of Chile paper published on November 24.

Yan Carrière-Swallow and Luis Felipe Céspedes, the paper's authors, use a vector auto-regression model to compare industrial production in the US with several emerging market economies in response to a severe shock to the stock markets. The authors say studies suggest that

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