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The Balance Sheet Effects and Macroeconomic Development in the Pacific Region

Author

Listed:
  • Akira Kohsaka

    (Professor of Economics, Osaka School of International, Public Policy Osaka, University, 1-31 Machikaneyama-cho, Toyonaka, Japan 560-0043)

  • Masahiro Enya

    (Associate Professor of Economics, Osaka International University 3-50-1, Sugi, Hirakata, Osaka Japan 573-0192)

Abstract

This paper focuses on balance sheet adjustments across the recent boom-bust cycles in the Pacific region along with structural changes in sectoral balance sheets and policy environments. Comparing empirical regularities across industrial as well as East Asian countries over the past decades, our analysis shows that asset price busts and concurrent macroeconomic developments in East Asia share some common patterns, identified using event analysis, with industrial economies.Regarding the macroeconomic impact of asset market price busts, we generally observed qualitatively similar features between industrial countries and East Asian emerging markets. Major differences between the two groups appear in the magnitude of swings and the speed of recoveries of the key macroeconomic variables. Negative impacts on investment were stronger in East Asia, but quicker recoveries were their features, whereas private consumption was commonly rather robust to asset market turmoil. (c) 2007 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Akira Kohsaka & Masahiro Enya, 2007. "The Balance Sheet Effects and Macroeconomic Development in the Pacific Region," Asian Economic Papers, MIT Press, vol. 6(1), pages 101-129, Winter.
    • Handle: RePEc:tpr:asiaec:v:6:y:2007:i:1:p:101-129
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    Cited by:

    1. Elisha Houston & Julia Minty & Nathan Dal Bon, 2008. "Investment in East Asia since the Asian financial crisis," Economic Roundup, The Treasury, Australian Government, issue 2, pages 13-34, July.
    2. Wimboh Santoso & Made Sukada, 2009. "Risk profile of households and the impact on financial stability," BIS Papers chapters, in: Bank for International Settlements (ed.), Household debt: implications for monetary policy and financial stability, volume 46, pages 58-74, Bank for International Settlements.

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