What Caused the Asian Currency and Financial Crisis? Part Ii: the Policy Debate

41 Pages Posted: 10 Jun 2000 Last revised: 11 Oct 2010

See all articles by Giancarlo Corsetti

Giancarlo Corsetti

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); University of Rome III - Department of Economics; Centre for Economic Policy Research (CEPR)

Paolo A. Pesenti

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Nouriel Roubini

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 1998

Abstract

The paper explores the view that the Asian currency and financial crises in 1997 and 1998 reflected structural and policy distortions in the countries of the region, even if market overreaction and herding caused the plunge of exchange rates, asset prices, and economic activity to be more severe than warranted by the initial weak economic conditions. The second part of the paper presents a reconstruction of the Asian meltdown -- from the antecedents in 1995-96 to the recent developments in the summer of 1998 -- in parallel with a survey of the debate on the strategies to recover from the crisis, the role of international intervention, and the costs and benefits of capital controls.

Suggested Citation

Corsetti, Giancarlo and Pesenti, Paolo A. and Roubini, Nouriel, What Caused the Asian Currency and Financial Crisis? Part Ii: the Policy Debate (December 1998). NBER Working Paper No. w6834. Available at SSRN: https://ssrn.com/abstract=227609

Giancarlo Corsetti (Contact Author)

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

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University of Rome III - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Paolo A. Pesenti

Federal Reserve Bank of New York ( email )

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National Bureau of Economic Research (NBER)

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Nouriel Roubini

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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