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Does devaluation lead to economic recovery or contraction? Theory and policy with reference to Thailand

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  • Graham Bird

    (Surrey Centre for International Economic Studies, University of Surrey, Guildford, UK)

  • Ramkishen S. Rajan

    (School of Economics, University of Adelaide, Australia; Institute of Policy Studies, Singapore)

Abstract

Most analyses of the East Asian financial crisis have focused on its causes and the links between currency and banking crises. However a related question is what happens in the aftermath of a crisis? What factors determine the path of an economy in the post-devaluation phase? Does it swiftly bounce back, with the crisis being followed by a period of economic recovery, or does it face a period of economic recession if not outright output collapse? An important element in answering these questions is to consider the response to devaluation, since this constitutes an almost invariant component of economic stabilisation. This paper examines these questions analytically as well as by using Thailand as a case study. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Graham Bird & Ramkishen S. Rajan, 2004. "Does devaluation lead to economic recovery or contraction? Theory and policy with reference to Thailand," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(2), pages 141-156.
    • Handle: RePEc:wly:jintdv:v:16:y:2004:i:2:p:141-156
    DOI: 10.1002/jid.1056
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    Cited by:

    1. Fisera, Boris & Workie Tiruneh, Menbere & Hojdan, David, 2021. "Currency depreciations in emerging economies: A blessing or a curse for external debt management?," International Economics, Elsevier, vol. 168(C), pages 132-165.
    2. Ramkishen S. Rajan & Makarand Parulkar, 2008. "Real Sector Shocks and Monetary Policy Responses in a Financially Vulnerable Emerging Economy," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 44(3), pages 21-33, May.
    3. Sajid Anwar & Desh Gupta, 2006. "Financial Restructuring and Economic Growth in Thailand," Global Economic Review, Taylor & Francis Journals, vol. 35(1), pages 113-127.

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