Financial Crisis, Capital Outflows and Policy Responses: Simple Analytics and Examples from East Asia
Financial crises seem to have become the norm rather than the exception since 1992. In recognition of the frequency with which countries seem to be hit by financial crises, any typical undergraduate course in Money and Banking nowadays includes a section on financial crisis in emerging economies. While these texts offer useful and up-to-date discussions on concepts such as financial crises and sterilization of capital flows, there does not seem to be any attempt to link the discussion of these contemporary issues to the age-old analytics of the money market and money multiplier. This paper examines the impact of a crisis of confidence and resultant capital outflows from a small and open economy, and the possible policy options in response to such outflows using simple tools and definitions that will be familiar to any Money and Banking/Intermediate Macroeconomics student. To facilitate the discussion, examples are drawn from the East Asian crisis of 1997-98 (Indonesia, Korea, Malaysia and Thailand), though the analysis remains pertinent to emerging economies in general.
|Date of creation:||Apr 2003|
|Contact details of provider:|| Postal: Adelaide SA 5005|
Phone: (+ 61 8) 8303 5672
Fax: (+ 61 8) 8223 1460
Web page: http://www.adelaide.edu.au/cies/
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.:
- Akira Ariyoshi & Andrei A Kirilenko & Inci Ã–tker & Bernard J Laurens & Jorge I Canales Kriljenko & Karl F Habermeier, 2000. "Capital Controls; Country Experiences with Their Use and Liberalization," IMF Occasional Papers 190, International Monetary Fund.
- 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.).
- 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, 2000.
"Las crisis gemelas: las causas de los problemas bancarios y de balanza de pagos
[The twin crises: Te causes of banking and balance of payments problems]," MPRA Paper 13842, University Library of Munich, Germany.
- 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.
- Jason Furman & Joseph E. Stiglitz, 1998. "Economic Crises: Evidence and Insights from East Asia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 1-136.
When requesting a correction, please mention this item's handle: RePEc:adl:cieswp:2003-11. 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: (Dmitriy Kvasov)
If references are entirely missing, you can add them using this form.