Global Economic Effects of the Asian Currency Devaluations

by Noland, Marcus; Liu, Li-Gang; Robinson, Sherman; Wang, Zhi

• ISBN13: 9780881322606
• ISBN10: 0881322601
• Format: Paperback
• Copyright: 1998-06-01
• Publisher: Peterson Inst for Intl Economics

Summary

The Asian financial crisis precipitated significant changes in real exchange rates in the region that substantially altered the volume and pattern of international trade. It was predicted that the crisis countries would increase their exports and, especially, reduce their imports. Japan, China, and the other non-crisis countries will experience more complex changes. The trade balances of the United States and Western Europe would deteriorate by about $40-50 billion as a result of the currency movements in Asia. Written at the height of the crisis, this study quantifies the impact of the currency changes on the individual countries in Asia, on the United States, on Europe and on other regions on a sector-by-sector basis. It analyzes the additional impact that might occur if China, a relative bystander in the crisis, were to devalue its currency as well. It then examines potential trade policy responses to these developments including the risk of an upsurge in protectionist pressure in the United States.

Table of Contents

Preface	vii	(4)
Acknowledgments	xi
1 Introduction and Overview	1	(30)
Introduction	1	(2)
Origins and Nature of the Crisis	3	(2)
The Fundamentalist Story	5	(16)
The Panic Story	21	(5)
Credibility	26	(1)
Summary	27	(4)
2 Global Economic Effects	31	(30)
Structure of the World Model	31	(4)
Defining Modeling Scenarios	35	(4)
Results	39	(18)
Conclusion	57	(4)
3 Impact on the United States	61	(12)
Trade Policy Response	64	(7)
Conclusion	71	(2)
Appendices	73	(28)
Appendix A Algebraic Description of the Model	73	(18)
Appendix B Sectoral Definitions and Their GTAP-ISIC Concordance	91	(4)
Appendix C Sensitivity Analyses	95	(4)
Appendix D Elasticities	99	(2)
References	101