Towards Understanding the Asian Crisis and its Aftermath

Souphala Chomsisengphet and Magda Kandil

Journal of the Asia Pacific Economy, 2007, vol. 12, issue 4, 452-484

Abstract: During the 1997 economic crisis in Asia, we observed that several East Asian economies encountered significant external and internal shocks that led to a widespread economic recession. The severe exchange rate depreciation may have harmed the supply side of these economies such that production was contracted. Many argue that the initial tightened domestic policies aimed at countering these shocks and restoring economic growth may have further exacerbated the initial crisis by contracting the domestic sector. This paper analyzes the impact of anticipated and unanticipated changes in the real exchange rate, fiscal spending, the money supply, and energy prices on output and price in Korea, Indonesia, Malaysia, Philippines, and Thailand. The results indicate that anticipated real depreciation during the crisis may have adversely affected the supply side, shrinking output growth while accelerating price inflation. In contrast, the combined effects of supply and demand channels render the outcome of unanticipated currency depreciation inconclusive on output growth and price inflation. Indonesia and Malaysia have experienced a significant reduction in average real output growth beyond the crisis period with a significant increase in domestic price inflation in Indonesia only. In most cases, we credit accommodating policies for countering external shocks.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/13547860701594095 (text/html)
Access to full text is restricted to subscribers.

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:taf:rjapxx:v:12:y:2007:i:4:p:452-484

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rjap20

DOI: 10.1080/13547860701594095

Access Statistics for this article

Journal of the Asia Pacific Economy is currently edited by Leong Liew

More articles in Journal of the Asia Pacific Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().