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A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting of a Small Open Economy

Listed author(s):
  • Keisuke Otsu

    (Institute for Monetary and Economic Studies, Bank of Japan (E-mail: keisuke.ootsu@boj.or.jp))

This paper applies the business cycle accounting method a la Chari, Kehoe and McGrattan (2007) to a standard neoclassical small open economy model and assesses the recent crises in Hong Kong, Korea, Singapore and Thailand. The key common features of these crises are the sudden output collapses and consumption drops as large as the output drops. Quantitative results show that the sudden drops in total factor productivity are important in explaining the output drops. Distortions in the foreign debt market are important in Korea and Thailand whereas distortions in the domestic capital market are important in Hong Kong and Singapore in explaining the large consumption drops.

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File URL: http://www.imes.boj.or.jp/research/papers/english/07-E-16.pdf
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Paper provided by Institute for Monetary and Economic Studies, Bank of Japan in its series IMES Discussion Paper Series with number 07-E-16.

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Date of creation: Aug 2007
Handle: RePEc:ime:imedps:07-e-16
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