Asia's Trade Performance after the Currency Crisis

13 Pages Posted: 7 Mar 2006

See all articles by Matthew Higgins

Matthew Higgins

Federal Reserve Bank of New York

Thomas Klitgaard

Federal Reserve Bank of New York

Abstract

The Asian countries hit by the 1997-98 currency crisis experienced a sharp reversal of capital flows that forced their current account balances to move from deficit to surplus. This study of the trade flows of Indonesia, Malaysia, South Korea, and Thailand finds that steep declines in imports, measured in dollar terms, accounted for almost all of the improvements in current account balances. However, a fuller picture emerges when the authors analyze the trade flows according to the volume of goods being shipped and the prices of these goods. The analysis shows that several factors contributed to the current account adjustment: higher export volumes in response to increased foreign demand outside of Asia, lower dollar import prices in line with declining world export prices, and the collapse in import volumes due to sharp declines in domestic economic activity.

Keywords: currency crisis, trade flows, Indonesia, Malaysia, Thailand, South Korea

JEL Classification: F14, F32, F41

Suggested Citation

Higgins, Matthew and Klitgaard, Thomas, Asia's Trade Performance after the Currency Crisis . Economic Policy Review, Vol. 6, No. 3, September 2000. Available at SSRN: https://ssrn.com/abstract=888761

Matthew Higgins

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Thomas Klitgaard (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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