Experiences with Current Account Deficits in Southeast Asia
In: Current Account and External Financing
In the 1990s, Southeast Asia experienced very rapid growth along with large and persistent current account deficits. The episode lasted from 1990 to around 1996, ending up with the outbreak of the Asian crisis in 1997–98. The current account reversals to surpluses were associated with sudden stops in capital inflows. These inflows significantly exceeded current account deficits in the first half of the 1990s; however they had not yet recovered their pre-crisis levels by 2006. The Southeast Asian sudden stop episode was also associated to sharp contractions in output that were unprecedented in Asia over the sample period. These declines in output were followed by relatively quick recoveries but permanently lower growth rates. This paper documents and analyzes the historical experience of Southeast Asian countries regarding their current account deficits. This experience illustrates how high growth rates can be associated with significant external and domestic vulnerabilities. It is suggested that for these countries’ experience, high rates of investment spending driving the current account cycle and increasing financial fragility were key determining factors.
(This abstract was borrowed from another version of this item.)
|This chapter was published in: Kevin Cowan & Sebastián Edwards & Rodrigo O. Valdés & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Current Account and External Financing, , chapter 14, pages 537-582, 2008.|
|This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v12c14pp537-582.|
|Contact details of provider:|| Postal: |
Phone: (562) 670 2000
Fax: (562) 698 4847
Web page: http://www.bcentral.cl/
More information through EDIRC
References listed on IDEAS
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.:
- Jeffrey D. Sachs & Aaron Tornell & Andrés Velasco, 1996.
"Financial Crises in Emerging Markets: The Lessons from 1995,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 27(1), pages 147-216.
- Jeffrey Sachs & Aaron Tornell & Andres Velasco, 1996. "Financial Crises in Emerging Markets: The Lessons from 1995," NBER Working Papers 5576, National Bureau of Economic Research, Inc.
- Jeffrey Sachs & Aaron Tornell & Andres Velasco, 1996. "Financial Crises in Emerging Markets: The Lessons from 1995," Harvard Institute of Economic Research Working Papers 1759, Harvard - Institute of Economic Research.
- Fratzscher, Marcel & Matthieu Bussiere, 2003.
"Towards A New Early Warning System of Financial Crises,"
Royal Economic Society Annual Conference 2003
81, Royal Economic Society.
- Bussiere, Matthieu & Fratzscher, Marcel, 2006. "Towards a new early warning system of financial crises," Journal of International Money and Finance, Elsevier, vol. 25(6), pages 953-973, October.
- Bussière, Matthieu & Fratzscher, Marcel, 2002. "Towards a new early warning system of financial crises," Working Paper Series 0145, European Central Bank.
- Ramon Moreno, 1997. "Lessons from Thailand," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov7.
- Raghuram G. Rajan & Luigi Zingales, 1998.
"Which Capitalism? Lessons Form The East Asian Crisis,"
Journal of Applied Corporate Finance,
Morgan Stanley, vol. 11(3), pages 40-48.
- Raghuram G. Rajan & Luigi Zingales, 1998. "Which Capitalism? Lessons from the East Asian Crisis," CRSP working papers 486, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Koh, Winston T.H. & Mariano, Roberto S. & Pavlov, Andrey & Phang, Sock Yong & Tan, Augustine H.H. & Wachter, Susan M., 2005. "Bank lending and real estate in Asia: market optimism and asset bubbles," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1103-1118, January.
- Carmen M. Reinhart & Graciela L. Kaminsky, 1999.
"The Twin Crises: The Causes of Banking and Balance-of-Payments Problems,"
American Economic Review,
American Economic Association, vol. 89(3), pages 473-500, June.
- Reinhart, Carmen & Kaminsky, Graciela, 1999. "The twin crises: The causes of banking and balance of payments problems," MPRA Paper 14081, University Library of Munich, Germany.
- Graciela L. Kaminsky & Carmen M. Reinhart, 1996. "The twin crises: the causes of banking and balance-of-payments problems," International Finance Discussion Papers 544, Board of Governors of the Federal Reserve System (U.S.).
- Paola Bongini & Stijn Claessens & Giovanni Ferri, 2001.
"The Political Economy of Distress in East Asian Financial Institutions,"
Journal of Financial Services Research,
Springer, vol. 19(1), pages 5-25, February.
- Bongini, Paola & Claessens, Stijn & Ferri, Giovanni, 2000. "The political economy of distress in East Asian financial institutions," Policy Research Working Paper Series 2265, The World Bank.
- Frankel, Jeffrey A & Rose, Andrew K, 1996.
"Currency Crashes in Emerging Markets: Empirical Indicators,"
CEPR Discussion Papers
1349, C.E.P.R. Discussion Papers.
- Jeffrey A. Frankel & Andrew K. Rose, 1996. "Currency Crashes in Emerging Markets: Empirical Indicators," NBER Working Papers 5437, National Bureau of Economic Research, Inc.
- Jeffrey J. Frankel and Andrew K. Rose., 1996. "Currency Crashes in Emerging Markets: Empirical Indicators," Center for International and Development Economics Research (CIDER) Working Papers C96-062, University of California at Berkeley.
- Drine, I. & Rault, Ch., 2004. "Does the Balassa-Samuelson Hypothesis Hold for Asian Countries?. An Empirical Analysis using Panel Data and Cointegration Tests," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(4).
- Stiglitz, Joseph E, 1996. "Some Lessons from the East Asian Miracle," World Bank Research Observer, World Bank Group, vol. 11(2), pages 151-77, August.
When requesting a correction, please mention this item's handle: RePEc:chb:bcchsb:v12c14pp537-582. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudio Sepulveda)
If references are entirely missing, you can add them using this form.