Was there a boom in money and credit prior to East Asia's recent currency crisis?

Ramon Moreno

No 98-05, Pacific Basin Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: This paper assesses the relationship between money and credit and episodes of sharp depreciation in East Asia by (i) examining growth rates of money and credit variables around depreciation episodes; (ii) estimating the impact of money and credit variables on the probability of a share depreciation episode using logit models; (iii) evaluating the signals contained in money and credit variables prior to episodes of sharp currency depreciation. Reserve money grew rapidly prior to the 1997 currency crisis in East Asia. However, signs of a money or credit boom based on other indicators were mixed. The 1997 episodes differ from East Asia's past experience in a number of ways. Rapid growth in the M2 multiplier and in the ratio of M2 to foreign reserves, positive deviations of reserve money from trend, and declines or sluggish growth in reserve money and in foreign reserves, helped predict episodes of sharp depreciation up to mid-1996. While some of these indicators indicated the possibility of a crisis in some of the countries prior to the 1997 episodes, they did not consistently predict the sharp depreciations that occurred.

Keywords: Financial crises - Asia; Asia; East Asia (search for similar items in EconPapers)
Date: 1998
New Economics Papers: this item is included in nep-ifn, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.frbsf.org/economic-research/wp-content/uploads/sites/4/23-41.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfpb:98-05

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Pacific Basin Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC.
Bibliographic data for series maintained by Federal Reserve Bank of San Francisco Research Library ().