Title: Macro-Structural Balance and the Buffer-Shift Mechanism: Evidence from Emerging Economies under Global Shocks
Authors: Reem Shakir Ketab
Volume: 9
Issue: 9
Pages: 195-208
Publication Date: 2025/09/28
Abstract:
This study aims to analyze the role of macro-structural balance in reshaping the transmission paths of global shocks within emerging economies. The research proposes a novel mechanism, termed the Buffer-Shift Mechanism (BSM), through which economies with stronger structural foundations redirect the impact of external shocks away from the real economy toward financial channels that are more capable of absorption. A Macro-Structural Balance Index (MSBI) was developed using Principal Component Analysis (PCA) across three dimensions: fiscal discipline, monetary independence, and export diversification. In addition, a Resilient Growth Index (RGI) was constructed based on output volatility, recovery speed, and growth performance during crises. Employing a Panel SVAR model with data from 26 emerging economies over the period 2000-2023, the study tested how responses to oil price shocks and global interest rate shocks differ according to levels of macro-structural balance. The findings reveal that economies with higher MSBI scores experience less output volatility and redirect shock transmission paths in line with the Buffer-Shift Mechanism hypothesis. Accordingly, this research introduces a new analytical framework to understand how macroeconomic structures not only mitigate shocks but also actively re-engineer their transmission channels. The study contributes to the literature by developing a composite index (MSBI) that has not previously been used in this form to measure the capacity of economies to redirect shocks rather than merely absorb them.