Two Tales of Adjustment: East Asian Lessons for European Growth

Anusha Chari and Peter Henry

No 19840, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Paths into the Asian Crisis of 1997-98 and the recent global financial crisis were similar, but the roads out could not be more different. Common wisdom has it that on impact Asia endured fiscal austerity imposed by the IMF whereas the IMF recommended stimulus in the case of the advanced nations at the epicenter of the crisis in 2008-09. While the IMF did recommend different policies to begin with, the fiscal adjustment in Asia was far more modest than is commonly known and the switch from stimulus to austerity in Europe was quite abrupt. The difference in fiscal stance helps explain the difference in the post-crisis paths of output and employment in the two regions.

JEL-codes: E62 E65 F4 F43 F68 O11 O57 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-mac and nep-opm
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Published as Two Tales of Adjustment: East Asian Lessons for European Growth Anusha Chari and Peter Blair Henry IMF Economic Review, 2015, vol. 63, issue 1, pages 164-196

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Journal Article: Two Tales of Adjustment: East Asian Lessons for European Growth (2015)
Working Paper: Two Tales of Adjustment: East Asian Lessons for European Growth (2014)
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