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The Asian Financial Crisis in Retrospect: What Happened? What Can We Conclude?

  • Wink Joosten
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    This memorandum provides an overview of the Asian financial crisis of 1997-98. It reviews its evolution, causes, and consequences and examines the reaction by (inter)national policymakers. Macroeconomic indicators were deteriorating before the crisis, but it is debatable whether that alone can explain the severity and spread of the crisis. One group of observers have argued that the root of the crisis lies in fundamental economic weaknesses; others have claimed that East Asia fell prey to a sudden shift in investor confidence. The effects of the Asian crisis have not been limited to East Asia: the crisis has had farreaching consequences, particularly for some other emerging market economies. The advanced economies and China, in contrast, have weathered the crisis quite well. While the IMF has been criticised for its heavy-handed and intrusive response, recovery was fairly rapid in most cases. Yet, although the most-heavily affected countries have made progress with financial and corporate reforms, much remains to be done before this process is complete. Like the crises that preceded and followed the Asian financial crisis, the events in Asia demonstrate the need to strengthen the international financial architecture. Download PDF-file (302 Kbytes)

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    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Memorandum with number 87.

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    Date of creation: Mar 2004
    Date of revision:
    Handle: RePEc:cpb:memodm:87
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    1. Taimur Baig & Ilan Goldfajn, 1999. "Financial Market Contagion in the Asian Crisis," IMF Staff Papers, Palgrave Macmillan, vol. 46(2), pages 3.
    2. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part I: A Macroeconomic Overview," NBER Working Papers 6833, National Bureau of Economic Research, Inc.
    3. Enzo Grilli, 2002. "The Asian Crisis: Trade Causes and Consequences," The World Economy, Wiley Blackwell, vol. 25(2), pages 177-207, 02.
    4. Boorman, Jack & Lane, Timothy & Schulze-Ghattas, Marianne & Bulir, Ales & Ghosh, Atish R. & Hamann, Javier & Mourmouras, Alex & Phillips, Steven, 2000. "Managing financial crises: the experience in East Asia," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 53(1), pages 1-67, December.
    5. John G. Fernald & Oliver D. Babson, 1999. "Why has China survived the Asian crisis so well? What risks remain?," International Finance Discussion Papers 633, Board of Governors of the Federal Reserve System (U.S.).
    6. Reuven Glick, 1998. "Thoughts on the origins of the Asia crisis: impulses and propagation mechanisms," Pacific Basin Working Paper Series 98-07, Federal Reserve Bank of San Francisco.
    7. Andrew Berg, 1999. "The Asia Crisis: Causes, Policy Responses, and Outcomes," IMF Working Papers 99/138, International Monetary Fund.
    8. Robert J. Barro, 2001. "Economic Growth in East Asia Before and After the Financial Crisis," NBER Working Papers 8330, National Bureau of Economic Research, Inc.
    9. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part II: The Policy Debate," NBER Working Papers 6834, National Bureau of Economic Research, Inc.
    10. Jenny Corbett & David Vines, 1998. "The Asian Crisis: Competing Explanations," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1998-12, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
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