Published:November 5, 2009Paper Released:October 2009Authors:Diego Comin, Norman Loayza, Farooq Pasha, and Luis ServenExecutive Summary:At the end of 2007, the U.S. economy entered a recession that, by the first quarter of 2009, had reduced U.S. GDP by 2.2 percent. The Mexican economy was showing no sign of distress until the U.S. recession began. Despite that, Mexican GDP declined by 7.8 percent during the same period. This and similar episodes from other developing countries motivate several q