Managing East Asia's Macroeconomic Volatility

East Asia has experienced a dramatic decrease in output growth volatility over the past 20 years. This is good news, as output growth volatility affects poor households because of coping strategies that have long-term, harmful consequences, and the...

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Main Authors: Olaberria, Eduardo, Rigolini, Jamele
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
TAX
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090706140259
http://hdl.handle.net/10986/4180
id okr-10986-4180
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ADVERSE EFFECTS
AGGREGATE OUTPUT
ALLOCATION OF RESOURCES
AMERICAN ECONOMIC REVIEW
ASSETS
AVERAGE GROWTH
AVERAGE GROWTH RATE
AVERAGE LEVEL
BANK SUPERVISION
BANKING
BANKING CRISIS
BANKRUPTCY
BOND
BORROWERS
BUSINESS CYCLE
BUSINESS CYCLES
BUSINESS PRACTICES
CAPITA GROWTH
CAPITAL FLOWS
CAPITAL INFLOWS
CENTRAL BANK
CENTRAL BANKS
COMMODITY
COMMODITY PRICES
COMPARATIVE ADVANTAGE
CONSUMER PRICE
CONSUMER PRICE INDEX
CONSUMPTION GROWTH
CONSUMPTION VOLATILITY
CREDITOR
CRISIS
CRISIS VOLATILITY
CROSS COUNTRY
CROSS COUNTRY EVIDENCE
CYCLICAL FISCAL POLICY
CYCLICAL VOLATILITY
DEPENDENT VARIABLE
DEPOSIT
DEPOSIT INSURANCE
DEVELOPING COUNTRIES
DEVELOPMENT ECONOMICS
DISCRETIONARY POLICIES
DIVERSIFICATION
DOMESTIC CREDIT
DUTCH DISEASE
DYNAMIC PANEL
EARNINGS
ECONOMETRIC EVIDENCE
ECONOMIC ACTIVITY
ECONOMIC CRISES
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
ECONOMIC MODELS
ECONOMIC OUTLOOK
ECONOMIC PERFORMANCE
ECONOMIC POLICY
ECONOMIC SHOCKS
ECONOMIC UNCERTAINTY
EFFECT OF RECESSIONS
EMERGING ECONOMIES
EMERGING MARKET
EMERGING MARKET BUSINESS
EMERGING MARKETS
EQUITY
ERROR TERM
ESTIMATED REDUCTION
ESTIMATION METHOD
EXCHANGE
EXCHANGE RATE
EXOGENOUS SHOCKS
EXPLANATORY VARIABLES
EXTERNAL CONDITIONS
EXTERNAL FACTORS
EXTERNAL SHOCK
EXTERNAL SHOCKS
EXTERNAL VULNERABILITY
FEDERAL RESERVE
FINANCIAL CRISIS
FINANCIAL DEPTH
FINANCIAL DEVELOPMENT
FINANCIAL FLOWS
FINANCIAL INSTITUTIONS
FINANCIAL MARKETS
FINANCIAL OPENNESS
FINANCIAL STABILITY
FISCAL CONSOLIDATIONS
FISCAL MANAGEMENT
FISCAL POLICIES
FISCAL POLICY
FLUCTUATIONS
FOREIGN CAPITAL
FOREIGN DIRECT INVESTMENTS
FUTURE
GLOBAL BUSINESS
GLOBAL ECONOMY
GLOBALIZATION
GOVERNMENT CONSUMPTION
GOVERNMENT SPENDING
GROWTH
GROWTH PERFORMANCE
GROWTH RATE
GROWTH RATES
GROWTH REGRESSION
GROWTH VOLATILITY
HIGH INCOME
HIGH TRADE OPENNESS
HIGH VOLATILITY
HIGH-INCOME COUNTRIES
HIGHER VOLATILITY
HOUSEHOLD WELFARE
IMPACT OF SHOCKS
INCOME
INCOME RISK
INFLATION
INFLATION EXPECTATIONS
INFLATION RATE
INFLATION TARGETING
INFLATION VOLATILITY
INTERACTION TERMS
INTEREST
INTEREST RATE
INTEREST RATE SHOCKS
INTEREST RATES
INTERNATIONAL INTEREST
INTERNATIONAL INTEREST RATES
INTERNATIONAL MONETARY FUND
INTERNATIONAL PRICES
INTERNATIONAL RESERVES
INVESTMENT
INVESTORS
LABOR MARKET
LAGGED DEPENDENT
LAGGED LEVELS
LAGGED VALUES
LENDER OF LAST RESORT
LEVERAGE
LIBERALIZATION
LINK BETWEEN VOLATILITY
LIQUIDITY
LIQUIDITY CRISES
LOW INCOME
LOW INCOME COUNTRIES
LOW-INCOME COUNTRIES
MACROECONOMIC FLUCTUATIONS
MACROECONOMIC MANAGEMENT
MACROECONOMIC POLICIES
MACROECONOMIC STABILITY
MACROECONOMIC VOLATILITY
MACROECONOMICS
MEDIUM TERM
MIDDLE INCOME
MIDDLE INCOME COUNTRIES
MIDDLE-INCOME COUNTRIES
MONETARY ECONOMICS
MONETARY POLICIES
MONETARY POLICY
MONETARY RESEARCH
MONEY
NATURAL DISASTERS
NEGATIVE EFFECT
NEGATIVE IMPACT
0 HYPOTHESIS
OPEN ECONOMIES
OPEN ECONOMY
OUTPUT
OUTPUT GROWTH
OUTPUT VOLATILITY
OVERALL VOLATILITY
PER CAPITA GROWTH
POLICY MAKERS
POLICY RESEARCH
POLITICAL ECONOMY
POLITICAL POWER
POLITICAL REGIME
POOR COUNTRIES
POOR HOUSEHOLDS
POVERTY
PRICES
PRIVATE SECTOR
PRODUCTION STRUCTURE
PRUDENTIAL SUPERVISION
RATE OF GROWTH
RECESSIONS
REVERSE CAUSATION
REVIEW OF ECONOMICS
RISK SHARING
ROBUSTNESS CHECK
SAFETY NETS
SCATTER PLOT
SERIAL CORRELATION
SHARE
SIGNIFICANT EFFECT
SIGNIFICANT IMPACT
SOCIAL PROTECTION
STABILIZATION
STABLE GROWTH
STABLE INFLATION
STANDARD DEVIATION
SUM OF IMPORTS
TAX
TAX BASE VARIABILITY
TERMS OF TRADE
TRADE
TRADE GROWTH
TRADE SHOCKS
TRADE VOLUMES
TRADING PARTNERS
UPWARD PRESSURE
VOLATILITIES
VOLATILITY MEASURES
VOLATILITY OF INFLATION
VOLATILITY OF TERMS OF TRADE SHOCKS
WEIGHTS
WORLD DEVELOPMENT INDICATORS
WORLD ECONOMY
spellingShingle ADVERSE EFFECTS
AGGREGATE OUTPUT
ALLOCATION OF RESOURCES
AMERICAN ECONOMIC REVIEW
ASSETS
AVERAGE GROWTH
AVERAGE GROWTH RATE
AVERAGE LEVEL
BANK SUPERVISION
BANKING
BANKING CRISIS
BANKRUPTCY
BOND
BORROWERS
BUSINESS CYCLE
BUSINESS CYCLES
BUSINESS PRACTICES
CAPITA GROWTH
CAPITAL FLOWS
CAPITAL INFLOWS
CENTRAL BANK
CENTRAL BANKS
COMMODITY
COMMODITY PRICES
COMPARATIVE ADVANTAGE
CONSUMER PRICE
CONSUMER PRICE INDEX
CONSUMPTION GROWTH
CONSUMPTION VOLATILITY
CREDITOR
CRISIS
CRISIS VOLATILITY
CROSS COUNTRY
CROSS COUNTRY EVIDENCE
CYCLICAL FISCAL POLICY
CYCLICAL VOLATILITY
DEPENDENT VARIABLE
DEPOSIT
DEPOSIT INSURANCE
DEVELOPING COUNTRIES
DEVELOPMENT ECONOMICS
DISCRETIONARY POLICIES
DIVERSIFICATION
DOMESTIC CREDIT
DUTCH DISEASE
DYNAMIC PANEL
EARNINGS
ECONOMETRIC EVIDENCE
ECONOMIC ACTIVITY
ECONOMIC CRISES
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
ECONOMIC MODELS
ECONOMIC OUTLOOK
ECONOMIC PERFORMANCE
ECONOMIC POLICY
ECONOMIC SHOCKS
ECONOMIC UNCERTAINTY
EFFECT OF RECESSIONS
EMERGING ECONOMIES
EMERGING MARKET
EMERGING MARKET BUSINESS
EMERGING MARKETS
EQUITY
ERROR TERM
ESTIMATED REDUCTION
ESTIMATION METHOD
EXCHANGE
EXCHANGE RATE
EXOGENOUS SHOCKS
EXPLANATORY VARIABLES
EXTERNAL CONDITIONS
EXTERNAL FACTORS
EXTERNAL SHOCK
EXTERNAL SHOCKS
EXTERNAL VULNERABILITY
FEDERAL RESERVE
FINANCIAL CRISIS
FINANCIAL DEPTH
FINANCIAL DEVELOPMENT
FINANCIAL FLOWS
FINANCIAL INSTITUTIONS
FINANCIAL MARKETS
FINANCIAL OPENNESS
FINANCIAL STABILITY
FISCAL CONSOLIDATIONS
FISCAL MANAGEMENT
FISCAL POLICIES
FISCAL POLICY
FLUCTUATIONS
FOREIGN CAPITAL
FOREIGN DIRECT INVESTMENTS
FUTURE
GLOBAL BUSINESS
GLOBAL ECONOMY
GLOBALIZATION
GOVERNMENT CONSUMPTION
GOVERNMENT SPENDING
GROWTH
GROWTH PERFORMANCE
GROWTH RATE
GROWTH RATES
GROWTH REGRESSION
GROWTH VOLATILITY
HIGH INCOME
HIGH TRADE OPENNESS
HIGH VOLATILITY
HIGH-INCOME COUNTRIES
HIGHER VOLATILITY
HOUSEHOLD WELFARE
IMPACT OF SHOCKS
INCOME
INCOME RISK
INFLATION
INFLATION EXPECTATIONS
INFLATION RATE
INFLATION TARGETING
INFLATION VOLATILITY
INTERACTION TERMS
INTEREST
INTEREST RATE
INTEREST RATE SHOCKS
INTEREST RATES
INTERNATIONAL INTEREST
INTERNATIONAL INTEREST RATES
INTERNATIONAL MONETARY FUND
INTERNATIONAL PRICES
INTERNATIONAL RESERVES
INVESTMENT
INVESTORS
LABOR MARKET
LAGGED DEPENDENT
LAGGED LEVELS
LAGGED VALUES
LENDER OF LAST RESORT
LEVERAGE
LIBERALIZATION
LINK BETWEEN VOLATILITY
LIQUIDITY
LIQUIDITY CRISES
LOW INCOME
LOW INCOME COUNTRIES
LOW-INCOME COUNTRIES
MACROECONOMIC FLUCTUATIONS
MACROECONOMIC MANAGEMENT
MACROECONOMIC POLICIES
MACROECONOMIC STABILITY
MACROECONOMIC VOLATILITY
MACROECONOMICS
MEDIUM TERM
MIDDLE INCOME
MIDDLE INCOME COUNTRIES
MIDDLE-INCOME COUNTRIES
MONETARY ECONOMICS
MONETARY POLICIES
MONETARY POLICY
MONETARY RESEARCH
MONEY
NATURAL DISASTERS
NEGATIVE EFFECT
NEGATIVE IMPACT
0 HYPOTHESIS
OPEN ECONOMIES
OPEN ECONOMY
OUTPUT
OUTPUT GROWTH
OUTPUT VOLATILITY
OVERALL VOLATILITY
PER CAPITA GROWTH
POLICY MAKERS
POLICY RESEARCH
POLITICAL ECONOMY
POLITICAL POWER
POLITICAL REGIME
POOR COUNTRIES
POOR HOUSEHOLDS
POVERTY
PRICES
PRIVATE SECTOR
PRODUCTION STRUCTURE
PRUDENTIAL SUPERVISION
RATE OF GROWTH
RECESSIONS
REVERSE CAUSATION
REVIEW OF ECONOMICS
RISK SHARING
ROBUSTNESS CHECK
SAFETY NETS
SCATTER PLOT
SERIAL CORRELATION
SHARE
SIGNIFICANT EFFECT
SIGNIFICANT IMPACT
SOCIAL PROTECTION
STABILIZATION
STABLE GROWTH
STABLE INFLATION
STANDARD DEVIATION
SUM OF IMPORTS
TAX
TAX BASE VARIABILITY
TERMS OF TRADE
TRADE
TRADE GROWTH
TRADE SHOCKS
TRADE VOLUMES
TRADING PARTNERS
UPWARD PRESSURE
VOLATILITIES
VOLATILITY MEASURES
VOLATILITY OF INFLATION
VOLATILITY OF TERMS OF TRADE SHOCKS
WEIGHTS
WORLD DEVELOPMENT INDICATORS
WORLD ECONOMY
Olaberria, Eduardo
Rigolini, Jamele
Managing East Asia's Macroeconomic Volatility
geographic_facet East Asia and Pacific
East Asia
relation Policy Research working paper ; no. WPS 4989
description East Asia has experienced a dramatic decrease in output growth volatility over the past 20 years. This is good news, as output growth volatility affects poor households because of coping strategies that have long-term, harmful consequences, and the overall economy through its negative impact on economic growth. This paper investigates the factors behind this long decline in volatility, and derives lessons about ways to mitigate renewed upward pressure in face of the financial crisis. The authors show that if, on the one hand, high trade openness has sustained economic growth in the past several decades, on the other hand, it has made countries more vulnerable to external fluctuations. Although less frequent terms of trade shocks and more stable growth rates of trading partners have helped to reduce volatility in the past, the same external factors are now putting renewed pressure on volatility. The way forward seems therefore to be to counterbalance the external upward pressure on volatility by improving domestic factors. Elements under domestic control that can help countries deal with high volatility include more accountable institutions, better regulated financial markets, and more stable fiscal and monetary policies.
format Publications & Research :: Policy Research Working Paper
author Olaberria, Eduardo
Rigolini, Jamele
author_facet Olaberria, Eduardo
Rigolini, Jamele
author_sort Olaberria, Eduardo
title Managing East Asia's Macroeconomic Volatility
title_short Managing East Asia's Macroeconomic Volatility
title_full Managing East Asia's Macroeconomic Volatility
title_fullStr Managing East Asia's Macroeconomic Volatility
title_full_unstemmed Managing East Asia's Macroeconomic Volatility
title_sort managing east asia's macroeconomic volatility
publishDate 2012
url http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090706140259
http://hdl.handle.net/10986/4180
_version_ 1764390288497836032
spelling okr-10986-41802021-04-23T14:02:16Z Managing East Asia's Macroeconomic Volatility Olaberria, Eduardo Rigolini, Jamele ADVERSE EFFECTS AGGREGATE OUTPUT ALLOCATION OF RESOURCES AMERICAN ECONOMIC REVIEW ASSETS AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE LEVEL BANK SUPERVISION BANKING BANKING CRISIS BANKRUPTCY BOND BORROWERS BUSINESS CYCLE BUSINESS CYCLES BUSINESS PRACTICES CAPITA GROWTH CAPITAL FLOWS CAPITAL INFLOWS CENTRAL BANK CENTRAL BANKS COMMODITY COMMODITY PRICES COMPARATIVE ADVANTAGE CONSUMER PRICE CONSUMER PRICE INDEX CONSUMPTION GROWTH CONSUMPTION VOLATILITY CREDITOR CRISIS CRISIS VOLATILITY CROSS COUNTRY CROSS COUNTRY EVIDENCE CYCLICAL FISCAL POLICY CYCLICAL VOLATILITY DEPENDENT VARIABLE DEPOSIT DEPOSIT INSURANCE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DISCRETIONARY POLICIES DIVERSIFICATION DOMESTIC CREDIT DUTCH DISEASE DYNAMIC PANEL EARNINGS ECONOMETRIC EVIDENCE ECONOMIC ACTIVITY ECONOMIC CRISES ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC OUTLOOK ECONOMIC PERFORMANCE ECONOMIC POLICY ECONOMIC SHOCKS ECONOMIC UNCERTAINTY EFFECT OF RECESSIONS EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET BUSINESS EMERGING MARKETS EQUITY ERROR TERM ESTIMATED REDUCTION ESTIMATION METHOD EXCHANGE EXCHANGE RATE EXOGENOUS SHOCKS EXPLANATORY VARIABLES EXTERNAL CONDITIONS EXTERNAL FACTORS EXTERNAL SHOCK EXTERNAL SHOCKS EXTERNAL VULNERABILITY FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL FLOWS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL STABILITY FISCAL CONSOLIDATIONS FISCAL MANAGEMENT FISCAL POLICIES FISCAL POLICY FLUCTUATIONS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENTS FUTURE GLOBAL BUSINESS GLOBAL ECONOMY GLOBALIZATION GOVERNMENT CONSUMPTION GOVERNMENT SPENDING GROWTH GROWTH PERFORMANCE GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH VOLATILITY HIGH INCOME HIGH TRADE OPENNESS HIGH VOLATILITY HIGH-INCOME COUNTRIES HIGHER VOLATILITY HOUSEHOLD WELFARE IMPACT OF SHOCKS INCOME INCOME RISK INFLATION INFLATION EXPECTATIONS INFLATION RATE INFLATION TARGETING INFLATION VOLATILITY INTERACTION TERMS INTEREST INTEREST RATE INTEREST RATE SHOCKS INTEREST RATES INTERNATIONAL INTEREST INTERNATIONAL INTEREST RATES INTERNATIONAL MONETARY FUND INTERNATIONAL PRICES INTERNATIONAL RESERVES INVESTMENT INVESTORS LABOR MARKET LAGGED DEPENDENT LAGGED LEVELS LAGGED VALUES LENDER OF LAST RESORT LEVERAGE LIBERALIZATION LINK BETWEEN VOLATILITY LIQUIDITY LIQUIDITY CRISES LOW INCOME LOW INCOME COUNTRIES LOW-INCOME COUNTRIES MACROECONOMIC FLUCTUATIONS MACROECONOMIC MANAGEMENT MACROECONOMIC POLICIES MACROECONOMIC STABILITY MACROECONOMIC VOLATILITY MACROECONOMICS MEDIUM TERM MIDDLE INCOME MIDDLE INCOME COUNTRIES MIDDLE-INCOME COUNTRIES MONETARY ECONOMICS MONETARY POLICIES MONETARY POLICY MONETARY RESEARCH MONEY NATURAL DISASTERS NEGATIVE EFFECT NEGATIVE IMPACT 0 HYPOTHESIS OPEN ECONOMIES OPEN ECONOMY OUTPUT OUTPUT GROWTH OUTPUT VOLATILITY OVERALL VOLATILITY PER CAPITA GROWTH POLICY MAKERS POLICY RESEARCH POLITICAL ECONOMY POLITICAL POWER POLITICAL REGIME POOR COUNTRIES POOR HOUSEHOLDS POVERTY PRICES PRIVATE SECTOR PRODUCTION STRUCTURE PRUDENTIAL SUPERVISION RATE OF GROWTH RECESSIONS REVERSE CAUSATION REVIEW OF ECONOMICS RISK SHARING ROBUSTNESS CHECK SAFETY NETS SCATTER PLOT SERIAL CORRELATION SHARE SIGNIFICANT EFFECT SIGNIFICANT IMPACT SOCIAL PROTECTION STABILIZATION STABLE GROWTH STABLE INFLATION STANDARD DEVIATION SUM OF IMPORTS TAX TAX BASE VARIABILITY TERMS OF TRADE TRADE TRADE GROWTH TRADE SHOCKS TRADE VOLUMES TRADING PARTNERS UPWARD PRESSURE VOLATILITIES VOLATILITY MEASURES VOLATILITY OF INFLATION VOLATILITY OF TERMS OF TRADE SHOCKS WEIGHTS WORLD DEVELOPMENT INDICATORS WORLD ECONOMY East Asia has experienced a dramatic decrease in output growth volatility over the past 20 years. This is good news, as output growth volatility affects poor households because of coping strategies that have long-term, harmful consequences, and the overall economy through its negative impact on economic growth. This paper investigates the factors behind this long decline in volatility, and derives lessons about ways to mitigate renewed upward pressure in face of the financial crisis. The authors show that if, on the one hand, high trade openness has sustained economic growth in the past several decades, on the other hand, it has made countries more vulnerable to external fluctuations. Although less frequent terms of trade shocks and more stable growth rates of trading partners have helped to reduce volatility in the past, the same external factors are now putting renewed pressure on volatility. The way forward seems therefore to be to counterbalance the external upward pressure on volatility by improving domestic factors. Elements under domestic control that can help countries deal with high volatility include more accountable institutions, better regulated financial markets, and more stable fiscal and monetary policies. 2012-03-19T19:11:22Z 2012-03-19T19:11:22Z 2009-07-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090706140259 http://hdl.handle.net/10986/4180 English Policy Research working paper ; no. WPS 4989 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper East Asia and Pacific East Asia