COVID-19 in Developing Economies - Vox eBooks
edited by Simeon Djankov and Ugo Panizza - 22 Jun 2020
At the beginning of the COVID-19 pandemic, it was hoped that warm weather and younger populations would shield many developing countries from the virus. This hope has not been realised. While the pandemic is mostly under control in many advanced economies, some developing countries in Africa and Latin America are registering an increase in the number of cases and may suffer long lasting consequences from the pandemic. This eBook, Co-published with the International Development Policy journal at the Graduate Institute in Geneva, summarises the early work focusing on developing and emerging economies.
Chapter 25 - pp 329
Emerging market currency risk around ‘global disasters’: Evidence from the Global Financial Crisis and the COVID-19 crisis, Giancarlo Corsetti, Simon Lloyd and Emile Marin
After reviewing the depreciation of emerging market currencies since the onset of the COVID-19 crisis, we document the similarities and differences relative to the Global Financial Crisis. In this chapter, we study the excess returns from holding a portfolio long in emerging market currency and short in US dollars around global crises, and interpret their dynamics through the lens of a theory of yield curves and exchange rates. The COVID crisis reminds us that, although the co-movement between exchange rates and capital outflows is low on average, it becomes strong during global crises.
