Publication

This paper analyzes the effects of external shocks on countries in Emerging Asia. For that purpose, it estimates a Bayesian Vector Auto-Regressive model (BVAR) with an informative prior on the steady state, including variables representing world economic activity, financial conditions, Chinese GDP and an aggregate GDP index of eight East Asian countries. It shows that almost half of the forecast error variance of Emerging Asia's real GDP growth can be explained by external factors.