The Asian Financial Crisis: Causes, Contagion and Consequences

by Edited by Pierre-Richard Agénor , Marcus Miller , David Vines , Axel Weber

• ISBN13: 9780521029001
• ISBN10: 0521029007
• Edition: 1st
• Format: Paperback
• Copyright: 2006-11-02
• Publisher: Cambridge University Press

Summary

Presents the first theoretical analysis of the Asian financial crisis and draws out the general lessons of an event whose potential long term effects have been likened to those of the Crash of 1929. Part I presents a factual and analytic overview of what happened: the role of 'vulnerability'; the interconnection between currency crises and financial crises; and why crisis turned into collapse. Part II considers more detailed issues, including how the inflation of non-traded goods prices created vulnerability, welfare-reducing capital inflow owing to under-regulated financial markets, and the onset of speculative attacks. Part III assesses all aspects of contagion, in particular the role of geographic proximity. The final section addresses policy issues. Joseph Stiglitz argues that there is much that can be done to reduce the frequency of crises and to mitigate the severity of crises when they happen. The book finishes with a round-table discussion of policy issues.

Table of Contents

Acknowledgements

Introduction Pierre-Richard Agé

nor, Marcus Miller, David Vines and Axel A. Weber

Part I. General Accounts: 1. The role of macroeconomic and financial sector linkages in East Asia's financial crisis Pedro Alba, Amar Bhattacharya, Atijn Claessens, Swati Ghosh, Leonardo Hernandez and Sule Ozler

2. The Asian crisis: lessons from the collapse of financial systems, exchange rates and macroeconomic policy Jenny Corbett, David Vines and Christopher Bliss

3. Are capital inflows to developing countries a vote for or against economic policy reforms? Michael P. Dooley and Kenneth Kletzer

4. The Asian crisis: an overview of the empirical evidence and policy debate Giancarlo Corsetti, Paolo Pesenti, Nouriel Roubini and Richard Portes

Part II. Theoretical Contributions: 5. Capital markets and the instability of open economics Philippe Aghion, Philippe Bacchetta, Abhijit Banerjee and Gianluca Femminis

6. Volatility and the welfare costs of financial market integration Pierre-Richard Agé

nor, Joshua Aizenman and John Driffil

7. A theory of the onset of currency attacks Stephen Morris, Hyun Song Shin and Jonathan P. Thomas

Part III. Contagion: 8. Contagion: monsoonal effects, spillovers and jumps between multiple equilibria Paul Masson and Axel A. Weber

9. Contagion and trade: why are currency crises regional? Reuven Glick, Andrew K. Rose and Mark P. Taylor

10. Competition, complementarity and contagion in East Asia Ishac Diwan, Bernard Hoekman, Jenny Corbett and David Vines

Part IV. Policy Responses: 11. Coping with crises: is there a 'silver bullet'? Amar Bhattacharya and Marcus Miller

12. Must financial crises be this frequent and this painful? Joseph Stiglitz

13. Round table discussion Richard Portes, Phillip Turner and Charles A. Goodhart

Index.