Open Economies Review

, Volume 23, Issue 4, pp 597–621 | Cite as

From the Great Moderation to the Global Crisis: Exchange Market Pressure in the 2000s

  • Joshua AizenmanEmail author
  • Jaewoo Lee
  • Vladyslav Sushko
Research Article


We study exchange market pressures (EMP) and using international reserves by emerging markets (EMs) during the 2000s. We find that financial considerations dominated trade factors. The impact of gross short-term external debt quintuples during the crisis. Capital outflows and deleveraging was the force behind EMP rise during the global financial crisis. Greater FDI (greater portfolio debt) inflows prior to the crisis were associated with a lower (higher) crisis EMP, respectively. The severity of the financial shock was exacerbated by financial ties to the U.S., while the trade shock was more severe in EMs with a larger commodity export share.


Exchange market pressure Financial and trade factors International reserves Global crisis 

JEL classification

F15 F21 F31 F32 


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.UCSC and the NBER Economics E2Santa CruzUSA
  2. 2.Research Department IMFWashingtonUSA
  3. 3.MED, Bank for International Settlements (BIS)BaselSwitzerland

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