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What Caused the Asian Currency and Financial Crisis? Part II: The Policy Debate

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  • Giancarlo Corsetti
  • Paolo Pesenti
  • Nouriel Roubini

Abstract

The paper explores the view that the Asian currency and financial crises in 1997 and 1998 reflected structural and policy distortions in the countries of the region, even if market overreaction and herding caused the plunge of exchange rates, asset prices, and economic activity to be more severe than warranted by the initial weak economic conditions. The second part of the paper presents a reconstruction of the Asian meltdown -- from the antecedents in 1995-96 to the recent developments in the summer of 1998 -- in parallel with a survey of the debate on the strategies to recover from the crisis, the role of international intervention, and the costs and benefits of capital controls.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6834.

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Date of creation: Dec 1998
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Publication status: published as (Published as "What Caused the Asian Currency and Financial Crisis?") Japan and the World Economy, Vol. 11 (1999): 305-373.
Handle: RePEc:nbr:nberwo:6834

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