On the Exposure of the Bric Countries to Global Economic Shocks

21 Pages Posted: 30 Jan 2019

See all articles by Ansgar Hubertus Belke

Ansgar Hubertus Belke

University of Duisburg-Essen - Department of Economics and Business Administration; IZA Institute of Labor Economics; Centre for European Policy Studies

Christian Dreger

European University Viadrina Frankfurt (Oder); IZA Institute of Labor Economics; Chinese Academy of Social Sciences (CASS)

Irina Dubova

University of Duisburg-Essen

Multiple version iconThere are 3 versions of this paper

Date Written: January 2019

Abstract

The financial crisis led to a deep recession in many industrial countries. While large emerging countries recovered relatively quickly, their performance deteriorated in recent years, despite the modest recovery in advanced economies. The higher divergence of business cycles is closely linked to the Chinese economy. During the crisis, the Chinese fiscal stimulus prevented an abrupt decline in GDP growth not only in that country, but also in resource‐rich economies. Due to lower commodity demand, the environment became more challenging for many emerging markets in recent years. This view is supported by Bayesian structural VARs specified for the individual BRIC (Brazil, Russia, India and China) countries. The results reveal a strong impact of the international economy on GDP growth. However, in contrast to the other countries, China plays a crucial role in determining global trade and oil prices. Therefore, the Chinese economy exerts significant spillovers to the other countries under analysis. The change in the Chinese growth strategy puts additional reform pressure especially in countries with abundant natural resources.

Keywords: Bayesian VARs, business cycle divergence, Chinese transformation

Suggested Citation

Belke, Ansgar Hubertus and Dreger, Christian and Dubova, Irina, On the Exposure of the Bric Countries to Global Economic Shocks (January 2019). The World Economy, Vol. 42, Issue 1, pp. 122-142, 2019, Available at SSRN: https://ssrn.com/abstract=3325385 or http://dx.doi.org/10.1111/twec.12674

Ansgar Hubertus Belke (Contact Author)

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for European Policy Studies ( email )

1 Place du Congres, 1000
Brussels, 1000
Belgium

Christian Dreger

European University Viadrina Frankfurt (Oder) ( email )

Frankfurt (Oder)
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chinese Academy of Social Sciences (CASS) ( email )

Beijing, 100732
China

Irina Dubova

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

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