The Asian Financial Crises: Causes, Consequences and Contagion

This conference volume was published under the auspices of the Global Economic Institutions project. This volume presents the first analysis, both theoretical and empirical, of the Asian Financial Crisis. It draws out the general lessons of an event whose potential long-term effects have been likened to the Crash of 1929. Part One 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 Two 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 Three assesses the many aspects of contagion, including both the channels through which it occurs and the role of geographical proximity. Chapter 12 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, and there is a comprehensive review of reform proposals. The volume finishes (Chapter 13) with a Round Table discussion of policy issues.