Working Paper: NBER ID: w15120
Authors: Michael P. Dooley; Michael M. Hutchison
Abstract: We find that emerging markets appeared to be somewhat insulated from developments in U.S. financial markets from early 2007 to summer 2008. From that point on, however, emerging markets responded very strongly to the deteriorating situation in the U.S. financial system and real economy. Policy measures taken in emerging markets to insulate themselves from global financial developments proved inadequate in the face of the credit crunch and decline in international trade that followed the Lehman bankruptcy in September 2008.
Keywords: subprime crisis; emerging markets; decoupling; recoupling; CDS spreads
JEL Codes: F3; F36; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| US subprime news (F65) | CDS spreads in emerging markets (F65) |
| Lehman Brothers bankruptcy (G33) | CDS spreads in emerging markets (F65) |
| Positive US economic developments (F69) | CDS spreads in emerging markets (F65) |
| Deterioration of US financial system (F65) | CDS spreads in emerging markets (F65) |
| Emerging markets insulation (F69) | US financial crisis impact (F65) |
| US financial news events (G14) | changes in CDS spreads (F44) |