Thailand's investment-driven boom and crisis

David Vines and Peter Warr

Oxford Economic Papers, 2003, vol. 55, issue 3, 440-466

Abstract: Analyses of the Asian crisis of 1997 have focused excessively on the financial sector, especially the banks. The role of the real sector in exposing the financial system to stress has been under-emphasized. This paper provides a real-sector explanation for Thailand's crisis, demonstrating the role of the investment boom of the preceding decade. We build a full macroeconomic model of the Thai economy and use it to demonstrate that the investment boom and its changing composition generated record growth but also increased macroeconomic vulnerability. This vulnerability, combined with the trigger of an export slowdown in 1996, produced the crisis. Copyright 2003, Oxford University Press.

Date: 2003
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Working Paper: Thailand’s Investment-Driven Boom and Crisis (2000)
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