Advanced Emerging Markets - a Reassessment of an Asset Class

12 Pages Posted: 21 Nov 2009

See all articles by Eduardo Levy Levy-Yeyati

Eduardo Levy Levy-Yeyati

Universidad Torcuato Di Tella - School of Business

Piero Ghezzi

Deutsche Bank

Christian M. Broda

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Date Written: November 4, 2009

Abstract

Emerging economies may not have fully decoupled, but global influence has moved from the slow-growing G7 to booming China contributing to EM growth outperformance. And most EM weathered the crisis remarkably well despite some initial scepticism. Behind this success lie two fundamental developments: 1) Gains in monetary policy credibility; and 2) fiscal consolidation, and reduced external vulnerability. As a result, emerging economies enjoyed unprecedented room for countercyclical policies for the first time since the inception of the asset class. These policy gains are likely to be permanent: while the crisis cast doubt on the myth of self-adjusting free markets, it showed the merits of solid fiscal and monetary policies.

Keywords: emerging markets, china, decoupling, asset performance

JEL Classification: E44, F02, G15

Suggested Citation

Levy-Yeyati, Eduardo Levy and Ghezzi, Piero and Broda, Christian M., Advanced Emerging Markets - a Reassessment of an Asset Class (November 4, 2009). Available at SSRN: https://ssrn.com/abstract=1509637 or http://dx.doi.org/10.2139/ssrn.1509637

Eduardo Levy Levy-Yeyati (Contact Author)

Universidad Torcuato Di Tella - School of Business ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires
Argentina

Piero Ghezzi

Deutsche Bank ( email )

31 West 52nd Street, 12th Floor
New York, NY 10019

Christian M. Broda

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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