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Capital Flows and Financial Crises: A Comparative Analysis of East Asia (1997-97) and Argentina (2001-02)

  • Pablo Bustelo

    ()

    (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía Aplicada I.)

This paper suggests, first, that a simple theoretical framework is useful in explaining financial crises in emerging economies. Second, it reviews the East Asian financial crises of 1997-98 . Third, the paper examines the origins of Argentina’s crisis of 2001-02. Fourth, it presents a comparative analysis of both crises, highlighting their similarities and differences. Finally, the conclusions point out the drawbacks of both hard and soft pegs respective to a single foreign currency as well as the need for emerging economies to use capital controls in order to avoid the recurrence of financial crises.

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Paper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales in its series Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales with number 04-17.

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Length: 29 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:ucm:doctra:04-17
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  1. Augusto de la Torre & Eduardo Levy Yeyati & Sergio L. Schmukler, 2003. "Living and Dying with Hard Pegs: The Rise and Fall of Argentina's Currency Board," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  2. Guillermo A. Calvo & Alejandro Izquierdo & Ernesto Talvi, 2003. "Sudden Stops, the Real Exchange Rate, and Fiscal Sustainability: Argentina's Lessons," NBER Working Papers 9828, National Bureau of Economic Research, Inc.
  3. Roberto Chang & Andrés Velasco, 2002. "The 1997-98 Liquidity Crisis: Asia versus Latin America," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 13, pages 413-452 Central Bank of Chile.
  4. Palma, Gabriel, 1998. "Three and a Half Cycles of 'Mania, Panic, and [Asymmetric] Crash': East Asia and Latin America Compared," Cambridge Journal of Economics, Oxford University Press, vol. 22(6), pages 789-808, November.
  5. Alejandro Izquierdo, 2002. "Sudden Stops, the Real Exchange Rate and Fiscal Sustainability in Argentina," The World Economy, Wiley Blackwell, vol. 25(7), pages 903-923, 07.
  6. Gabriel Palma, 2000. "The Three Routes to Financial Crises: The Need for Capital Controls," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2000-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  7. Philip Arestis, 2002. "Financial crisis in Southeast Asia: dispelling illusion the Minskyan way," Cambridge Journal of Economics, Oxford University Press, vol. 26(2), pages 237-260, March.
  8. Mark Spiegel, 2002. "Argentina's currency crisis: lessons for Asia," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug23.
  9. Shoji Nishijima, 2001. "Currency Crises in Asia and Latin America: A Comparison," Discussion Paper Series 122, Research Institute for Economics & Business Administration, Kobe University.
  10. Pablo Bustelo & Clara Garcia & Iliana Olivie, 1999. "Global and Domestic Factors of Financial Crises in Emerging Economies: Lessons from the East Asian Episodes (1997-1999)," Working Papers 002, Universidad Complutense de Madrid, Instituto Complutense de Estudios Internacionales.
  11. repec:idb:brikps:9187 is not listed on IDEAS
  12. Ronald I. McKinnon & Huw Pill, 1999. "Exchange Rate Regimes for Emerging Markets: Moral Hazard and International Overborrowing," Working Papers 99018, Stanford University, Department of Economics.
  13. Michael Mussa, 2002. "Argentina and the Fund: From Triumph to Tragedy," Peterson Institute Press: Policy Analyses in International Economics, Peterson Institute for International Economics, number pa67, 03.
  14. Jan A. Kregel, 1998. "East Asia Is Not Mexico: The Difference between Balance of Payments Crises and Debt Deflations," Economics Working Paper Archive wp_235, Levy Economics Institute.
  15. Werner Baer & Pedro Elosegui & Andres Gallo, 2002. "The Achievements and Failures of Argentina's Neo-liberal Economic Policies," Oxford Development Studies, Taylor & Francis Journals, vol. 30(1), pages 63-85.
  16. Perry, Guillermo & Serven, Luis, 2003. "The anatomy of a multiple crisis : why was Argentina special and what can we learn from it?," Policy Research Working Paper Series 3081, The World Bank.
  17. Eichengreen, Barry, 2002. "Financial Crises and What to Do About Them," OUP Catalogue, Oxford University Press, number 9780199257447, March.
  18. Michael Mussa, 2002. "Argentina and the Fund: From Triumph to Tragedy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa67, March.
  19. Bustelo, Pablo, 2000. "Novelties of financial crises in the 1990s and the search for new indicators," Emerging Markets Review, Elsevier, vol. 1(3), pages 229-251, November.
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