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Asia’s Post-Global Financial Crisis Adjustment : A Model-Based Dynamic Scenario Analysis

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Author Info

  • Masahiro Kawai

    (Asian Development Bank Institute)

  • Fan Zhai

Abstract

Using a dynamic global general equilibrium model, the paper assesses the short- and medium-term impacts of the global financial crisis on Asian economies and the implications of post-crisis adjustment in emerging East Asia (EEA) for the world economy. The analysis suggests that EEA is unlikely to be severely damaged permanently by the global financial crisis, and a worldwide fiscal stimulus could play an important role in stabilizing the global economy in crisis. EEAs efforts at strengthening regional demand, in conjunction with adopting a more flexible exchange rate regime, will promote more balanced regional growth and facilitate an orderly global rebalancing. However, despite the growing size of EEA in the global economy, the regions growth rebalancing has only modest spillover effects on the rest of the world. EEA can contribute to global growth, but it alone cannot become the sole engine driving post-crisis growth in the world economy.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 23055.

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Date of creation: Jan 2010
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Handle: RePEc:eab:financ:23055

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
Web page: http://www.eaber.org
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Related research

Keywords: dynamic global general equilibrium model; global financial crisis; Asia;

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  9. Wendner, Ronald, 1999. "A Calibration Procedure of Dynamic CGE Models for Non-steady State Situations Using GEMPACK," Computational Economics, Society for Computational Economics, vol. 13(3), pages 265-87, June.
  10. Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2008. "Monetary Policy and Business Cycles with Endogenous Entry and Product Variety," NBER Chapters, in: NBER Macroeconomics Annual 2007, Volume 22, pages 299-353 National Bureau of Economic Research, Inc.
  11. Obstfeld, Maurice & Rogoff, Kenneth S., 1995. "Exchange Rate Dynamics Redux," Scholarly Articles 12491026, Harvard University Department of Economics.
  12. Warwick J McKibbin & Andy Stoeckel, 2009. "Modelling the Global Financial Crisis," CAMA Working Papers 2009-25, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  13. Kawai, Masahiro & Zhai, Fan, 2009. "China-Japan-United States integration amid global rebalancing: A computable general equilibrium analysis," Journal of Asian Economics, Elsevier, vol. 20(6), pages 688-699, November.
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