IMF Economic Review

, Volume 59, Issue 1, pp 77–110 | Cite as

The Cross-Country Incidence of the Global Crisis

  • Philip R Lane
  • Gian Maria Milesi-Ferretti


We examine whether the cross-country incidence and severity of the 2008–09 global recession is systematically related to precrisis macroeconomic and financial factors. We find that the precrisis level of development, increases in the ratio of private credit to GDP, current account deficits, and openness to trade are helpful in understanding the intensity of the crisis. International risk sharing did little to shield domestic demand from the country-specific component of output declines, while those countries with large pre-crisis current account deficits saw domestic demand fall by much more than domestic output during the crisis.


F31 F32 


  1. Acharya, Viral, Schnabl, Philipp, and Suarez, Gustavo, 2009, “Securitization without Risk Transfer,” mimeo, New York University, November.Google Scholar
  2. Beck, Thorsten, and Demirgüç-Kunt, Asli, 2009, “Financial Institutions and Markets Across Countries and over Time: Data and Analysis,” World Bank Policy Research Working Paper No. 4943, May.Google Scholar
  3. Beck, Thorsten, Demirgüç-Kunt, Asli, and Levine, Ross, 2000, “A New Database on Financial Development and Structure,” World Bank Economic Review, Vol. 14, pp. 597–605.CrossRefGoogle Scholar
  4. Berglof, Erik, Korniyenko, Yevgeniya, Plekhanov, Alexander, and Zettelmeyer, Jeromin, 2009, “Understanding the Crisis in Emerging Europe,” mimeo, EBRD.Google Scholar
  5. Berkmen, Pelin, Gelos, Gaston, Rennhack, Robert, and Walsh, James P., 2009, “The Global Financial Crisis: Explaining Cross-Country Differences in the Output Impact,” IMF Working Paper 09/280.Google Scholar
  6. Blanchard, Olivier, Faruqee, Hamid, and Das, Mitali, 2010, “The Initial Impact of the Crisis on Emerging Market Countries,” Brookings Papers on Economic Activity, forthcoming.Google Scholar
  7. Brunnermeier, Markus, 2009, “Deciphering the Liquidity and Credit Crunch 2007–2008,” Journal of Economic Perspectives, Vol. 23, No. 1, pp. 77–100.CrossRefGoogle Scholar
  8. CES Ifo, 2009, “The Financial Crisis”, in The EEAG Report on The European Economy 2009 (Munich, Germany: Ifo Institute for Economic Research).Google Scholar
  9. Cetorelli, Nicola, and Goldberg, Linda, 2011, “Global Banks and International Shock Transmission: Evidence from the Crisis,” IMF Economic Review, forthcoming.Google Scholar
  10. Devereux, Michael B., and Yetman, James, 2010, “Financial De-Leveraging and the International Transmission of Shocks,” Hong Kong Institute for Monetary Research Working Paper No. 13.Google Scholar
  11. Giannone, Domenico, Lenza, Michele, and Reichlin, Lucrezia, 2011, “Market Freedom and the Global Recession,” IMF Economic Review, forthcoming.Google Scholar
  12. Gupta, Poonam, Mishra, Deepak, and Sahay, Ratna, 2007, “Behavior of output during currency crises,” Journal of International Economics, Vol. 72, No. 2, pp. 428–450.CrossRefGoogle Scholar
  13. Imbs, Jean, 2010, “The First Global Recession in Decades,” IMF Economic Review, Vol. 58, No. 2, pp. 327–354.CrossRefGoogle Scholar
  14. International Monetary Fund, Various years, Annual Report on Exchange Arrangements and Exchange Restrictions (Washington, DC, International Monetary Fund).Google Scholar
  15. International Monetary Fund, 2010, How Did Emerging Markets Cope in the Crisis? International Monetary Fund Policy Paper (Washington DC). Available from the Internet:
  16. Kamin, Steven B., and Pounder DeMarco, Laurie, 2010, “How Did a Domestic Housing Slump Turn into a Global Financial Crisis?,” Federal Reserve Board, International Finance Discussion Paper 2010-994, January.Google Scholar
  17. Kaminsky, Graciela, and Reinhart, Carmen, 1999, “The Twin Crises: The Causes of Banking and Balance-of-Payments Problems,” American Economic Review, Vol. 89, No. 3 (June), pp. 473–500.CrossRefGoogle Scholar
  18. Kose, Ayhan, Prasad, Eswar, and Terrones, Marco, 2009a, “Does Financial Globalization Promote International Risk Sharing? Journal of Development Economics, Vol. 89, No. 2, pp. 258–270.CrossRefGoogle Scholar
  19. Kose, Ayhan, Prasad, Eswar, and Terrones, Marco, 2009b, “Does Openness to International Financial Flows Raise Productivity Growth? Journal of International Money and Finance, Vol. 28, No. 4, pp. 554–580.CrossRefGoogle Scholar
  20. Krugman, Paul, 2008, “The International Finance Multiplier,” mimeo, Princeton University.Google Scholar
  21. Lane, Philip R., and Milesi-Ferretti, Gian Maria, 2007, “The External Wealth of Nations Mark II,” Journal of International Economics, Vol. 73, No. 2, pp. 223–250.CrossRefGoogle Scholar
  22. Lane, Philip R., and Milesi-Ferretti, Gian Maria, 2008, “The Drivers of Financial Globalization,” American Economic Review, Vol. 98, No. 2, pp. 327–332.CrossRefGoogle Scholar
  23. Milesi-Ferretti, Gian Maria, 2009, “The International Transmission of the Financial Crisis,” mimeo, International Monetary Fund, November.Google Scholar
  24. Milesi-Ferretti, Gian Maria, and Razin, Assaf, 2000, “Current Account Reversals and Currency Crises: Empirical Regularities,” in Currency Crises, ed. by Paul Krugman, (Chicago, University of Chicago Press for NBER).Google Scholar
  25. Rose, Andrew, and Spiegel, Mark, 2010a, “The Causes and Consequences of the 2008 Crisis: Early Warning,” Global Journal of Economics, Vol. 1, No. 1, forthcoming.Google Scholar
  26. Rose, Andrew, and Spiegel, Mark, 2010b, “The Causes and Consequences of the 2008 Crisis: International Linkages and American Exposure,” Pacific Economic Review, Vol. 15, No. 3, pp. 340–363.CrossRefGoogle Scholar

Copyright information

© International Monetary Fund 2010

Authors and Affiliations

  • Philip R Lane
  • Gian Maria Milesi-Ferretti

There are no affiliations available

Personalised recommendations