Recovery and Sustainability in East Asia
AbstractThis paper analyzes the macroeconomic adjustment from the crisis in East Asia in a broad international prospective. The stylized pattern from the previous 160 currency crisis episodes over the period from 1970 to 1995 shows a V-type adjustment of real GDP growth in the years prior to and following a crisis. The adjustment shows a much sharper V-type in the crisis episodes with the IMF program, compared to those without. Cross-country regressions show that depreciation of real exchange rate, expansionary macroeconomic policies and favorable global environments are critical for the speedy post-crisis recovery. In this sense, the East Asian process of adjustment is not much different from the stylized pattern from the previous currency crisis episodes. However, the degree of initial contraction and following recovery has been far greater in East Asia than what the cross-country evidence predicts. This paper argues that the sharper adjustment pattern in East Asia is attributed to the severe liquidity crisis that was triggered by investor's panic and then amplified by the weak corporate and bank balance sheet. We find no evidence for a direct impact of a currency crisis on long-run growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8373.
Date of creation: Jul 2001
Date of revision:
Publication status: published as Recovery and Sustainability in East Asia , Yung Chul Park, Jong-Wha Lee. in Managing Currency Crises in Emerging Markets , Dooley and Frankel. 2003
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joon-Ho Hahm & Frederic S. Mishkin, 2000. "Causes of the Korean Financial Crisis: Lessons for Policy," NBER Working Papers 7483, National Bureau of Economic Research, Inc.
- Ratna Sahay & Deepak Mishra & Poonam Gupta, 2003. "Output Response to Currency Crises," IMF Working Papers 03/230, International Monetary Fund.
- Robert J. Barro & Jong-Wha Lee, 2002.
"IMF Programs: Who is Chosen and What Are the Effects?,"
NBER Working Papers
8951, National Bureau of Economic Research, Inc.
- Barro, Robert J. & Lee, Jong-Wha, 2005. "IMF programs: Who is chosen and what are the effects?," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(7), pages 1245-1269, October.
- Robert J Barro & Jong-Wha Lee, 2003. "IMF Programs: Who Is Chosen and What Are the Effects?," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2003-09, The Australian National University, Arndt-Corden Department of Economics.
- Mora, Ricardo & Siotis, Georges, 2005.
"External factors in emerging market recoveries: An empirical investigation,"
European Economic Review, Elsevier,
Elsevier, vol. 49(3), pages 683-702, April.
- Ricardo Mora & Georges Siotis, 2000. "External Factors in Emerging Market Recoveries: An Empirical Investigation," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1415, Econometric Society.
- Robert J. Barro, 2001. "Economic Growth in East Asia Before and After the Financial Crisis," NBER Working Papers 8330, National Bureau of Economic Research, Inc.
- Kohsaka, Akira, 2004. "A fundamental scope for regional financial cooperation in East Asia," Journal of Asian Economics, Elsevier, Elsevier, vol. 15(5), pages 911-937, October.
- Branimir Jovanovic, 2012. "How Policy Actions Affect Short-term Post-crisis Recovery?," CEIS Research Paper, Tor Vergata University, CEIS 253, Tor Vergata University, CEIS, revised 05 Oct 2012.
- Jinyoung Hwang & Neville Nien-Heui Jiang & Ping Wang, 2002. "Financial Collusion and Over-Lending," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0229, Vanderbilt University Department of Economics, revised Oct 2003.
- Pasquariello, Paolo, 2008. "The anatomy of financial crises: Evidence from the emerging ADR market," Journal of International Economics, Elsevier, Elsevier, vol. 76(2), pages 193-207, December.
- Komarek, Lubos & Melecky, Martin, 2005. "Currency Crises, Current Account Reversals and Growth : The Compounded Effect for Emerging Markets," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 735, University of Warwick, Department of Economics.
- Joyce, Joseph P. & Nabar, Malhar, 2009. "Sudden stops, banking crises and investment collapses in emerging markets," Journal of Development Economics, Elsevier, Elsevier, vol. 90(2), pages 314-322, November.
- Doowon Lee, 2006. "The Korean Economy in Transition: In Search for a New Model," Global Economic Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 35(2), pages 207-230.
- Spiros Bougheas & Hosung Lim & Simona Mateut & Paul Mizen & Cihan Yalcin, . "Lessons from the Asian Crisis: An Open Economy Credit Channel Model where Export Status Matters," Discussion Papers 12/16, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Saubhik Deb, 2006. "Trade First and Trade Fast: A Duration Analysis of Recovery from Currency Crisis," Departmental Working Papers, Rutgers University, Department of Economics 200607, Rutgers University, Department of Economics.
- Pritha Mitra, 2006. "Post-Crisis Recovery," IMF Working Papers 06/219, International Monetary Fund.
- Claessens,Constantijn A. & Klingebiel, Daniela & Laeven, Luc, 2004. "Resolving systemic financial crisis : policies and institutions," Policy Research Working Paper Series 3377, The World Bank.
- Masahiro Enya & Akira Kohsaka, 2004. "Monetary Transmissions Immediately after the Crisis in East Asia," Discussion Papers in Economics and Business, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) 04-05, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- Lin, T. -C., 2003. "Education, technical progress, and economic growth: the case of Taiwan," Economics of Education Review, Elsevier, Elsevier, vol. 22(2), pages 213-220, April.
- Hong, Kiseok & Tornell, Aaron, 2005. "Recovery from a currency crisis: some stylized facts," Journal of Development Economics, Elsevier, Elsevier, vol. 76(1), pages 71-96, February.
- Siegel, Jordan, 2005. "Can foreign firms bond themselves effectively by renting U.S. securities laws?," Journal of Financial Economics, Elsevier, Elsevier, vol. 75(2), pages 319-359, February.
- Hong, Kiseok & Lee, Jong-Wha & Lee, Young Soo, 2007. "Investment by Korean conglomerates before and after the crisis," Japan and the World Economy, Elsevier, Elsevier, vol. 19(3), pages 347-373, August.
- Inklaar, Robert & Yang, Jing, 2012. "The impact of financial crises and tolerance for uncertainty," Journal of Development Economics, Elsevier, Elsevier, vol. 97(2), pages 466-480.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.