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

Author

Listed:
  • Masahiro Kawai

    (Asian Development Bank Institute)

  • Fan Zhai

Abstract

Using a dynamic global general equilibrium model, the paper assesses the short- and medium-term impacts of the global financial crisis on Asian economies and the implications of post-crisis adjustment in emerging East Asia (EEA) for the world economy. The analysis suggests that EEA is unlikely to be severely damaged permanently by the global financial crisis, and a worldwide fiscal stimulus could play an important role in stabilizing the global economy in crisis. EEAs efforts at strengthening regional demand, in conjunction with adopting a more flexible exchange rate regime, will promote more balanced regional growth and facilitate an orderly global rebalancing. However, despite the growing size of EEA in the global economy, the regions growth rebalancing has only modest spillover effects on the rest of the world. EEA can contribute to global growth, but it alone cannot become the sole engine driving post-crisis growth in the world economy.

Suggested Citation

  • Masahiro Kawai & Fan Zhai, 2010. "Asia’s Post-Global Financial Crisis Adjustment : A Model-Based Dynamic Scenario Analysis," Finance Working Papers 23055, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:23055
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    File URL: http://www.eaber.org/node/23055
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    References listed on IDEAS

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    More about this item

    Keywords

    dynamic global general equilibrium model; global financial crisis; Asia;

    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
    • G01 - Financial Economics - - General - - - Financial Crises

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