How Important are Spillovers from Major Emerging Markets?

31 Pages Posted: 13 Jun 2017 Last revised: 3 Aug 2017

See all articles by Raju Huidrom

Raju Huidrom

World Bank

M. Ayhan Kose

Development Prospects Group at the World Bank

Franziska Ohnsorge

World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: June 7, 2017

Abstract

The seven largest emerging market economies -- China, India, Brazil, Russia, Mexico, Indonesia, and Turkey -- constituted more than one-quarter of global output and more than half of global output growth during 2010-15. These emerging markets, called EM7, are also closely integrated with other countries, especially with other emerging and frontier markets. Given their size and integration, growth in EM7 could have significant cross-border spillovers. The authors provide empirical estimates of these spillovers using a Bayesian vector autoregression model. They report three main results. First, spillovers from EM7 are sizeable: a 1 percentage point increase in EM7 growth is associated with a 0.9 percentage point increase in growth in other emerging and frontier markets and a 0.6 percentage point increase in world growth at the end of three years. Second, sizeable as they are, spillovers from EM7 are still smaller than those from G7 countries (Group of Seven of advanced economies). Specifically, growth in other emerging and frontier markets, and the global economy would increase by one-half to three times more due to a similarly sized increase in G7 growth. Third, among the EM7, spillovers from China are the largest and permeate globally.

Suggested Citation

Huidrom, Raju and Kose, M. Ayhan and Ohnsorge, Franziska, How Important are Spillovers from Major Emerging Markets? (June 7, 2017). World Bank Policy Research Working Paper No. 8093. Available at SSRN: https://ssrn.com/abstract=2985519

Raju Huidrom (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

M. Ayhan Kose

Development Prospects Group at the World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Franziska Ohnsorge

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
34
Abstract Views
154
PlumX Metrics