Economics at your fingertips  

Three-and-a-half Cycles of ‘Mania, Panic, and [Asymmetric] Crash’: East Asia and Latin America Compared

José Gabriel Palma ()

Chapter 15 in Financial Liberalization and the Asian Crisis, 2001, pp 254-286 from Palgrave Macmillan

Abstract: Abstract This paper argues that, despite some significant differences, the 1982 debt crisis, the 1994 Mexican crisis, and the 1997 East Asian crisis share the common characteristic that ‘over-lending’ and ‘over-borrowing’ are basically endogenous market failures of over-liquid and under-regulated financial markets — along the lines described by Kindleberger’s Manias, Panics, and Crashes (although these crashes have tended to be ‘asymmetric’, as the largest international lenders have emerged relatively intact). The paper concludes with a discussion of Brazil’s increasing vulnerability to a sudden collapse of confidence and withdrawal of finance, which indicates the probability of another impending crisis. In the last 15 years, the world economy has witnessed three major financial crises: the 1982 (mainly Latin American) debt crisis; the 1994 Mexican crisis, and its repercussions throughout Latin America (commonly known as the ‘Tequila effect’); and the 1997 East Asian crisis. Furthermore, Brazil’s growing financial vulnerability signals the probability of another major crisis in the not too distant future (see Postscript, p. 273). This paper argues that the last three financial crises share many common characteristics.

Keywords: Current Account; Real Exchange Rate; Market Failure; Foreign Capital; Debt Crisis (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations: Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Three and a Half Cycles of 'Mania, Panic, and [Asymmetric] Crash': East Asia and Latin America Compared (1998)
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:

Ordering information: This item can be ordered from

DOI: 10.1057/9780230518629_15

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2022-05-24
Handle: RePEc:pal:palchp:978-0-230-51862-9_15