Asian and European Financial Crises Compared
AbstractThe European and Asian financial crises are the two most recent major regional crises. This paper compares their origins and evolution. The origins of the two sets of crises were different in some respects, but broadly similar. The two sets of crises also shared similarities in their evolution, but here the differences were more significant. The European crisis countries received more external financial support, despite the fact that they involved more solvency issues while the Asian crises involved more liquidity issues. On balance, the reform programs in the European crises were less demanding and rigorous than in the Asian crises. Partly as a consequence, the negative impacts on the global economy have been larger. Author Edwin M. Truman draws three lessons from this analysis: First, history will repeat itself; there will be other external financial crises. Second, other countries have a stake in appropriate crisis management. Third, the International Monetary Fund (IMF) and other countries were mistaken in treating the European crises as individual country crises rather than as a crisis for the euro area as a whole that demanded policy conditionality on all members of the euro area.
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Bibliographic InfoPaper provided by Peterson Institute for International Economics in its series Working Paper Series with number WP13-9.
Date of creation: Oct 2013
Date of revision:
financial crises; Asian financial crises; European financial crises; International Monetary Fund; European Central Bank; crisis management; policy coordination; macroeconomic policies; banking policies;
Find related papers by JEL classification:
- F3 - International Economics - - International Finance
- F20 - International Economics - - International Factor Movements and International Business - - - General
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F3 - International Economics - - International Finance
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-02 (All new papers)
- NEP-CBA-2013-11-02 (Central Banking)
- NEP-CWA-2013-11-02 (Central & Western Asia)
- NEP-EEC-2013-11-02 (European Economics)
- NEP-FMK-2013-11-02 (Financial Markets)
- NEP-MON-2013-11-02 (Monetary Economics)
- NEP-OPM-2013-11-02 (Open Economy Macroeconomics)
- NEP-SEA-2013-11-02 (South East Asia)
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