It has been nearly eight months since the Asian crisis began with the dramatic devaluation of the Thai baht, but it has been only a little over three months since that turbulence began to shake U.S. financial markets. What was first seen as an isolated correction in an exotic East Asian currency is now being viewed as a potential catalyst to global financial meltdown. Is it now time to batten down the hatches and hope we don't get smashed in the Asian turbulence, or is the recent tumultuous period just a mild swell on otherwise calm waters? ; The simple answer is that the direct impact on the U.S. economy will be modest but not trivial. Some industries will feel it more than others. The indirect impact from increased financial market uncertainty and spillovers into Japan and other emerging markets, however, has the potential to be much larger than the direct impact. Unfortunately, these indirect effects are particularly difficult to quantify.
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Article provided by Federal Reserve Bank of Dallas in its journal In Depth.
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Cletus C. Coughlin & Patricia S. Pollard, 2000.
"State exports and the Asian crisis,"
Review,
Federal Reserve Bank of St. Louis, issue Jan, pages 3-14.
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