Thailand’s Investment-Driven Boom and Crisis

David Vines, Peter Warr and Australian National University

No 51, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Analyses of the Asian crisis 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 the Thai crisis of 1997, demonstrating the role of the investment boom which occurred over 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 produced record growth but also increased macroeconomic vulnerability which, combined with the trigger of an export slowdown in 1996, caused the crisis.

Keywords: Thai crisis; currency crisis; macroeconomic model; vulnerability (search for similar items in EconPapers)
JEL-codes: F32 F34 O16 (search for similar items in EconPapers)
Date: 2000-12-01
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Journal Article: Thailand's investment-driven boom and crisis (2003)
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