Abstract
We consider the proposition that an important cause of the 1997 Asian crisis has been the massive current account deficits and associated excessive external indebtedness of the “Tiger” economies up to 1997. Our survey of the literature on the causes of the crisis suggests that diverse symptoms such as overvalued currencies, excessive credit expansion, careless risk management and lack of foreign exchange reserves may ultimately be attributed to excessive capital inflows and external insolvency of the Tiger economies. After reviewing the relevant arguments and appropriate statistical methodologies, we test for external (in)solvency of the 7 Tigers, using data on current accounts and current account-to-GDP ratios. We find considerable evidence of current account unsustainability and external insolvency, notably for Indonesia, Malaysia, Philippines and Thailand.
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Tsoukis, C., Alyousha, A. (2004). The Genesis of the South-East Asian Crisis. In: Tsoukis, C., Agiomirgianakis, G.M., Biswas, T. (eds) Aspects of Globalisation. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-8881-2_12
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DOI: https://doi.org/10.1007/978-1-4419-8881-2_12
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