The Asian Currency Crisis - A Fait Accompli?
AbstractThis paper analyzes the East Asian Currency Crisis to examine what factors led to the crisis and the differential impact across countries. Empirical data of 7 Asian countries over the period 1990 – 1996 is examined. The sample of seven countries is divided into two categories; crisis countries and affected countries. Comparison of several economic indicators is made between these two categories to determine what factors led to the severe consequences in the crisis countries as opposed to affected countries, all of which were subject to contagion. The crisis countries were found to have had aggressive growth policies that were fuelled by reflationary strategies; particularly rapid monetary growth and capital inflows. With higher relative inflation and repressed interest rates, exchange rate equilibrium as dictated by purchasing power and interest rate parities were out of line given pegged exchange rates. The currencies had become overvalued. The result being current account deficits that were financed by capital inflows, increasingly in the form of short term foreign currency denominated loans. The combined impact of all of this had been to increase the crisis countries’ vulnerability to a speculative attack and a resulting self-fulfilling crisis.
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 University Library of Munich, Germany in its series MPRA Paper with number 12756.
Date of creation: Dec 1997
Date of revision:
Publication status: Published in Malaysian Journal of Economic Studies 1-2.34(1997): pp. 67-92
Asian Currency Crisis; differential impact on countries;
Find related papers by JEL classification:
- E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
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.:
- Ronald I. McKinnon & Huw Pill, 1998.
"International Overborrowing: A Decomposition of Credit and Currency Risks,"
98004, Stanford University, Department of Economics.
- McKinnon, Ronald I. & Pill, Huw, 1998. "International Overborrowing: A Decomposition of Credit and Currency Risks," World Development, Elsevier, vol. 26(7), pages 1267-1282, July.
- Rodrigo O. ValdÃ©s & Ilan Goldfajn, 1997. "Are Currency Crises Predictable?," IMF Working Papers 97/159, International Monetary Fund.
- Otker, Inci & Pazarbasioglu, Ceyla, 1997. "Speculative attacks and macroeconomic fundamentals: evidence from some European currencies," European Economic Review, Elsevier, vol. 41(3-5), pages 847-860, April.
- Calvo, Guillermo A. & Mendoza, Enrique G., 1996.
"Mexico's balance-of-payments crisis: a chronicle of a death foretold,"
Journal of International Economics,
Elsevier, vol. 41(3-4), pages 235-264, November.
- Guillermo A. Calvo & Enrique G. Mendoza, 1996. "Mexico's balance-of-payments crisis: a chronicle of death foretold," International Finance Discussion Papers 545, Board of Governors of the Federal Reserve System (U.S.).
- Jeffrey A. Frankel & Andrew K. Rose, 1996.
"Currency crashes in emerging markets: an empirical treatment,"
International Finance Discussion Papers
534, Board of Governors of the Federal Reserve System (U.S.).
- Frankel, Jeffrey A. & Rose, Andrew K., 1996. "Currency crashes in emerging markets: An empirical treatment," Journal of International Economics, Elsevier, vol. 41(3-4), pages 351-366, November.
- Subir Lall, 1997. "Speculative Attacks, Forward Market Intervention and the Classic Bear Squeeze," IMF Working Papers 97/164, International Monetary Fund.
- Berthelemy, J C & Varoudakis, A, 1995. "Thresholds in Financial Development and Economic Growth," The Manchester School of Economic & Social Studies, University of Manchester, vol. 63(0), pages 70-84, Suppl..
- Mansor H. Ibrahim, 2006. "Stock prices and bank loan dynamics in a developing country: The case of Malaysia," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 71-89, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.