GDP) is intended to qualify the extent to which financial openness occurs in parallel with an increased reliance on capital flows that might involved greater stability features.

**Table 5. Descriptive Statistics of the Variables in the Econometric Estimations**

||**Low**|**er Grow**|**th/ Low**|**er Vulnera**|**bility (C **|**luster L)**|**Low**|**er Grow**|**th/ High **|**er Vulner**|**ability (C **|**luster V)**|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
||obs.|min|max|median|mean|std. dev.|obs.|min|max|median|mean|std. dev.|
|Real GDP growth (%)|60|-4.5|8.1|4.8|4.5|2.0|38|-5.7|7.2|4.4|3.8|3.0|
|Private sector credit growth (%)|60|-27.7|76.1|18.7|19.0|18.7|38|-19.2|69.4|16.9|19.7|17.9|
|Fiscal deficit (% of GDP)|60|-8.2|8.3|2.0|1.9|3.3|38|-2.9|17.6|3.2|3.8|4.3|
|Loan-to-deposit ratio (%)|60|67.0|187.4|112.0|110.2|25.6|38|81.1|300.9|124.1|140.8|48.0|
|REER Overvaluation|60|-0.2|0.1|0.0|0.0|0.0|38|-0.1|0.1|0.0|0.0|0.0|
|External debt (% of GDP)|60|20.2|106.9|49.5|49.2|18.0|38|20.4|128.0|62.8|68.1|27.2|
|Short-term debt, remaining maturity (% of FX reserves)|60|0.0|576.9|76.5|85.9|90.1|38|6.4|674.0|115.9|173.5|135.2|
|Trade openness; exports plus imports (% of GDP)|60|49.5|151.0|86.3|89.0|27.3|38|41.8|171.5|102.2|106.2|31.0|
|Export and import growth rates, difference in %|60|-22.8|76.7|0.0|3.4|15.8|38|-18.0|26.9|0.7|0.7|9.3|
|Financial openness; FX assets & liabilities (% of GDP)|60|3.3|63.9|15.5|16.8|10.8|38|3.7|120.6|18.5|25.9|23.0|
|FDI, net, % of GDP|60|-0.2|23.9|3.8|4.6|3.7|38|0.0|16.4|4.1|4.7|3.2|
|Counter-cyclical fiscal policies 2/|60|-1.1|1.7|0.0|0.1|0.5|38|-1.6|2.0|0.0|0.2|0.7|
|<br>Monetary tightening; Δ in velocity|60|-56.4|23.0|-6.9|-7.8|12.5|38|-26.2|15.3|-4.2|-5.2|8.8|
|Exchange rate flexibility|60|1.00|5.00|2.00|2.27|1.16|38|1.00|5.00|2.00|2.24|1.17|
|Capital controls|60|-2.54|1.81|0.09|0.06|1.18|38|-2.54|1.81|-0.96|-0.59|1.46|
|Initial level of income, share of G7|60|0.02|0.33|0.08|0.11|0.08|38|0.01|0.39|0.15|0.17|0.12|
|Vulnerability index, VIX|60|11.6|40.0|23.8|23.2|6.8|38|11.6|40.0|20.4|22.0|9.9|
|<br>Oil trade balance as share of exports and imports|60|-9.5|37.2|-3.4|-1.0|9.4|38|-8.7|0.0|-3.6|-4.3|2.3|
||**High**|**er Grow**|**th/ Low**|**er Vulnera**|**bility (C **|<br>**luster G)**|**High**|**er Grow**|**th/ High **|**er Vulner**|**ability (C **|<br>**luster H)**|
||obs.|min|max|median|mean|std. dev.|obs.|min|max|median|mean|std. dev.|
|Real GDP growth (%)|44|4.8|34.5|9.1|10.4|5.7|36|6.5|12.2|9.3|8.9|1.5|
|Private sector credit growth (%)|44|-33.8|74.4|27.6|29.3|21.0|36|7.8|65.8|37.9|39.6|13.7|
|Fiscal deficit (% of GDP)|44|-21.0|8.0|0.6|-0.1|4.5|36|-7.2|4.4|0.9|0.2|2.4|
|<br>Loan-to-deposit ratio (%)|44|75.4|209.9|132.1|131.7|29.9|36|100.6|244.8|150.7|155.0|37.0|
|<br>REER Overvaluation|44|-0.1|0.1|0.0|0.0|0.0|36|-0.1|0.0|0.0|0.0|0.0|
|External debt (% of GDP)|44|6.5|100.9|39.2|40.4|21.8|36|17.0|127.7|63.7|62.5|27.3|
|Short-term debt, remaining maturity (% of FX reserves)|44|0.0|318.0|71.1|80.8|78.1|36|74.5|533.9|227.3|250.7|136.7|
|Trade openness; exports plus imports (% of GDP)|44|47.2|172.2|87.2|93.1|30.2|36|47.4|166.6|110.7|111.0|26.4|
|Difference between export and import growth rates, %|44|-38.2|85.8|1.8|3.0|21.0|36|-16.1|14.3|-0.8|-1.5|6.6|
|Financial openness; FX assets plus liabilities (% of GDP)|44|3.4|60.3|9.8|13.0|11.2|36|3.8|107.3|13.1|29.4|30.5|
|FDI, net, % of GDP|44|-15.2|32.3|4.0|6.2|8.3|36|0.4|15.6|3.7|4.7|3.6|
|Fiscal tightening; Δ (fiscal balance - structural balance)|44|-3.4|1.6|-0.1|-0.2|0.8|36|-1.2|1.0|-0.1|-0.2|0.4|
|Monetary tightening; Δ in velocity|44|-46.0|23.9|-11.6|-9.4|12.6|36|-27.9|12.6|-9.7|-9.7|8.3|
|<br>Capital controls|44|1.00|5.00|2.00|2.09|0.83|36|1.00|5.00|2.00|2.03|0.94|
|<br>Initial level of income, share of G7|44|-2.54|1.81|0.09|-0.57|1.60|36|-2.54|1.13|-1.50|-0.72|1.78|
|Oil trade balance as share of total exports|44|0.03|0.28|0.07|0.09|0.06|36|0.02|0.30|0.14|0.13|0.08|
|Oil prices, index|44|11.6|40.0|23.8|25.2|10.1|36|11.6|28.6|13.3|15.3|5.0|
|Vulnerability index, VIX|44|-8.2|63.2|0.0|10.3|18.2|36|-7.4|29.7|-2.7|-0.8|8.8|

Sources: IMF’s World Economic Outlook database and authors’ calculations. Notes: Only the observations in the estimation sample for annual data are included in this table.

- <u>Policy variables. This category is self-explanatory and is the main area of focus of this paper. For</u> fiscal policy a measure of counter-cyclicality is used; namely, the difference between the fiscal balance and the cyclically-adjusted fiscal balance. An increase thus represents a tighter fiscal stance. Monetary policy enters through the change in money velocity; thus, an increase represents monetary tightening. The degree of exchange rate flexibility is measured by the index created by Reinhart and Rogoff (2004). This index ranges from 1 to 5 and a larger number represents greater exchange rate flexibility. The extent to which the country relies on capital controls is also part of the estimation through a de jure index that was created by Chinn and Ito (2008) using the IMF’s AREAER report. A larger index implies more openness (i.e., liberalization) of the capital account.

- <u>Global conditions. This is captured by the degree of global risk aversion as measured by the S&P</u> volatility index. It is the only regressor that enters contemporaneously in the estimated regressions. All other regressors are lagged to limit endogeneity concerns with growth/vulnerability outcomes.

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