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<p>The international Financial Crisis of 2008/2009 is used as a case study, with a unique dataset of 210 countries to examine potential resilience factors and with particular focus on population size, along with other pre-crisis determinants. The cross-section regressions suggest that smaller country size&#xa0;was&#xa0;associated with higher vulnerability (ceteris paribus), which is reflected in a larger initial impact magnitude of the Financial Crisis shock. The smallness disadvantage began to unfold for countries with a population size of between 1 and 10 million, and was particularly severe for the very small states with considerably less than 1 million inhabitants. This result emphasizes that small state characteristics drive economic resilience and volatility beyond factors already identified in the literature. There is also significant evidence that the shock impact persistence was prolonged by smaller country size. Thus, the disadvantage of smallness in terms of higher exposure has dominated the advantages of small countries in terms of flexibility and adaptation speed. Moreover, smaller states were on average hit earlier.</p>

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Country size and exposure to international economic shocks: new evidence from the Financial Crisis

  • 期刊论文

  • 发表日期：

    2025年5月23日

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  • Andreas Brunhart

摘要

The international Financial Crisis of 2008/2009 is used as a case study, with a unique dataset of 210 countries to examine potential resilience factors and with particular focus on population size, along with other pre-crisis determinants. The cross-section regressions suggest that smaller country size was associated with higher vulnerability (ceteris paribus), which is reflected in a larger initial impact magnitude of the Financial Crisis shock. The smallness disadvantage began to unfold for countries with a population size of between 1 and 10 million, and was particularly severe for the very small states with considerably less than 1 million inhabitants. This result emphasizes that small state characteristics drive economic resilience and volatility beyond factors already identified in the literature. There is also significant evidence that the shock impact persistence was prolonged by smaller country size. Thus, the disadvantage of smallness in terms of higher exposure has dominated the advantages of small countries in terms of flexibility and adaptation speed. Moreover, smaller states were on average hit earlier.