The East Asian Crisis: Macroeconomic Developments and Policy Lessons

By Kalpana Kochhar, Prakash Loungani, Mark R. Stone

September 1, 1998

Preview Citation

Format: Chicago

Kalpana Kochhar, Prakash Loungani, and Mark R. Stone The East Asian Crisis: Macroeconomic Developments and Policy Lessons, (USA: International Monetary Fund, 1998) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews macroeconomic developments during the first year of the crisis in east Asia and draws some preliminary policy lessons. The crisis is rooted in the interaction of large capital inflows and weak private and public sector governance. At the same time, macroeconomic adjustment in these countries has resulted in some surprising outcomes, including severe economic contractions, low inflation, and rapid external adjustment. The lessons for crisis resolution include the importance of tight monetary policy early on for exchange rate stabilization, flexible fiscal policy, and comprehensive structural reform. Crises are avoided by prudent macroeconomic policies, diligent bank supervision, transparent data dissemination, strong governance, and forward-looking policymaking, even in good times.

Subject: Commercial banks, Corporate sector, Economic sectors, Exchange rates, Export performance, Financial institutions, Financial sector, Financial services, Foreign exchange, Real interest rates

Keywords: Commercial banks, Corporate sector, Crisis country, East Asia, Exchange rate depreciation, Exchange rates, Financial market, Financial sector, Global, Nominal exchange rate, Private sector, Real interest rates, Thai baht, U.S. dollar, WP

Publication Details

Pages:

55
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 1998/128
Stock No:

WPIEA1281998
ISBN:

9781451935547
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers