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


  • Kawai, Masahiro

    (Asian Development Bank)

  • Zhai, Fan

    (Asian Development Bank)


Using a dynamic global general equilibrium model, the paper assesses the short- and medium-term impacts of the global financial crisis for Asian economies and the implications of post-crisis adjustment in East Asia for the world economy. The analysis suggests that East Asia may not be severely hit permanently by the global financial crisis, and that a worldwide fiscal stimulus could play an important role in stabilizing the global economy in crisis. East Asia’s efforts toward strengthening regional and domestic demand, in conjunction with more flexible exchange rate regimes, will promote more balanced regional growth, facilitating an orderly global rebalancing. However, despite the growing size of emerging East Asia in the global economy, the region’s growth rebalancing has only modest spillover effects on the rest of the world. Emerging East Asia can contribute to global growth, but it alone cannot become the sole engine leading post-crisis growth in the world economy.

Suggested Citation

  • Kawai, Masahiro & Zhai, Fan, 2010. "Asia’s Post-Global Financial Crisis Adjustment: A Model-Based Dynamic Scenario Analysis," Asian Development Review, Asian Development Bank, vol. 27(2), pages 122-151.
  • Handle: RePEc:ris:adbadr:2725

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    Cited by:

    1. Petri, Peter A. & Zhai, Fan, 2013. "Navigating a Changing World Economy: ASEAN, the People’s Republic of China, and India," ADBI Working Papers 404, Asian Development Bank Institute.

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications


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