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

Author

Listed:
  • Kawai, Masahiro

    (Asian Development Bank Institute)

  • Zhai, Fan

    (Asian Development Bank Institute)

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. EEA’s 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 region’s 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

  • Kawai, Masahiro & Zhai, Fan, 2010. "Asia's Post-Global Financial Crisis Adjustment: A Model-Based Dynamic Scenario Analysis," ADBI Working Papers 254, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0254
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    References listed on IDEAS

    as
    1. Zhang, Wenlang & Zhang, Zhiwei & Han, Gaofeng, 2010. "How does the US credit crisis affect the Asia-Pacific economies?--Analysis based on a general equilibrium model," Journal of Asian Economics, Elsevier, vol. 21(3), pages 280-292, June.
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    Cited by:

    1. Petri, Peter A. & Zhai, Fan, 2013. "Navigating a Changing World Economy: ASEAN, the People’s Republic of China, and India," ADBI Working Papers 404, Asian Development Bank Institute.

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    More about this item

    Keywords

    Computable general equilibrium model; global financial crisis; Easst Asia; emerging;
    All these keywords.

    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; Modern Monetary Theory
    • 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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