The post-crises output growth effects in a globalized economy

This paper investigates the persistent impact of financial crises on economic growth in different regimes of globalization. Relying on a nonlinear dynamic panel representation, this paper explains why the effects of globalization on growth weave into a tale of two opposite narratives. On average, a country experiences higher growth, the more open and integrated it is into the world. However, countries can also experience persistently lower medium-term output growth after a financial crisis, once globalization reaches a certain threshold. The benefits, as well as vulnerabilities, accrue earlier in the globalization process for low-income countries. © 2019 CEPII (Centre d'Etudes Prospectives et d'Informations Internationales), a center for research and expertise on the world economy