The Aftermaths of a Loss of Confidence in Emerging Market Economies to the Global Economy

29 Pages Posted: 27 Feb 2019 Last revised: 15 Oct 2019

Date Written: November 9, 2018

Abstract

With the increasing importance of emerging market economies (EMEs) in the global economy, any shocks emanating from these economies will inevitably impact the global economic landscape. After a decade of remarkable economic growth in the EMEs from 2000-2010, the risks have shifted from advanced economies to EMEs as the United States (US) tapered off quantitative easing. As the risk perception intensified, a permanent loss of confidence in these economies is anticipated. This paper explores the implications of the country risk premia shock in EMEs to domestic and the global economy using the intertemporal G-Cubed Model. The financial and trade channels are highlighted in this paper to explain how the shock can lead to permanent slowdown in economic growth. On the policy sphere, the shock has also important implications in rebalancing growth in both shocked and non-shocked economies. A global coordination is likewise needed to ensure economic and financial stability.

Keywords: Emerging Market, Global Economy, Country Risk Premia

JEL Classification: F47, F62, F65, F68

Suggested Citation

Syema, Iwan Evander, The Aftermaths of a Loss of Confidence in Emerging Market Economies to the Global Economy (November 9, 2018). Available at SSRN: https://ssrn.com/abstract=3332326 or http://dx.doi.org/10.2139/ssrn.3332326

Iwan Evander Syema (Contact Author)

Australian National University ( email )

Canberra
Australia

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
11
Abstract Views
183
PlumX Metrics