Resilience, Recovery, Crises, Economic Diversity, Local Projections
Abstract :
[en] This paper aims at assessing the resilience enhancing characteristic of economic diversification. The analyses performed in this study consist in comparing the output losses and recovery pace of countries
of different income and exports diversification levels after the occurrence of banking and currency
crises. To that end, local projection (LP) models are employed to estimate impulse response functions
(IRFs) in order to trace the effects of the crises on output levels over a 10-year horizon. Potential endogeneity is accounted for using instrumental variable local projection (IV-LP) alternative models.
The results tend to advocate in favor of more diversification as such strategy appears to foster the ability
of countries to absorb and/or recover from shocks regardless the income level. These findings contradict
in some extent the hypothesis of a U-shaped relationship between income and diversity which predicts incentives for re-concentration in advanced economies. These conflicting outcomes may be the sign of
a more pronounced trade-off between growth and stability goals in advanced economies compared to countries at early stages of development.
Disciplines :
Macroeconomics & monetary economics
Author, co-author :
Sukadi A Sukadi, Emmanuel ; Université de Mons - UMONS > Faculté Warocqué d'Economie et de Gestion > Service d'Economie
Language :
French
Title :
Does Economic Diversification Foster Resilience to Crises? Empirical Investigation
