Global Economic Effects of the Asian Currency Devaluations (Policy Analyses in International Economics)

Introduction......Page 2
Origins and Nature of the Crisis......Page 4
The Fundamentalist Story......Page 6
Table 1.1   Current account deficits as a share of GDP, 1975-97......Page 7
Figure 1.1B Malaysia's real exchange rate, January 1995-January 1998......Page 8
Figure 1.1D Indonesia's real exchange rate, January 1995-January 1998......Page 9
Figure 1.1E South Korea's real exchange rate, January 1995-January 1998......Page 10
Table 1.2 Banking system exposure to risk......Page 11
The Exchange Rate as a Transmission Mechanism......Page 12
Table 1.3 China’s nominal and real effective exchange rate, 1990-97......Page 16
Capital Inflows and Financial Fragility......Page 15
Figure 1.2 Stock market capitalization, 1985-1996......Page 17
The Trigger......Page 18
Figure 1.3B Malaysia's nominal exchange rate and stock market changes......Page 20
Figure 1.3D Indonesia's nominal exchange rate and stock market changes......Page 21
Lender Behavior......Page 22
Figure 1.4 South Korea's real GDP growth and real exchange rate change forecasts......Page 24
Transmission......Page 25
Table 1.5 Export markets for Asian competitors, 1995......Page 26
Credibility......Page 27
Summary......Page 28
Structure of the World Model......Page 31
Defining Modeling Scenarios......Page 35
Table 2.1 Exchange rate forecasts......Page 36
Table 2.2 Real effective exchange rates since July 1997......Page 37
Table 2.4 Modeling assumptions......Page 38
ASEAN-4 and South Korea......Page 39
Figure 2.1 Impact of Asian cumulative devaluations on Thailand's exports and imports......Page 40
Table 2.5 Change of bilateral trade flows from the base (current price, with productivity shock, Chinese devaluation excluded......Page 42
Table 2.6 GDP, balance of trade, and absorbtion changes......Page 43
Table 2.7 Sectoral change of production from the base (Chinese devaluation excluded)......Page 44
Table 2.8 Sectoral change of trade balance from the base (Chinese devaluation excluded)......Page 45
Figure 2.3 Impact of Asian cumulative devaluations onIndonesia's exports and imports......Page 46
Figure 2.4 Impact of Asian cumulative devaluations on the Philippines' exports and imports......Page 47
Singapore, Taiwan, and Japan......Page 48
Figure 2.6 Impact of Asian cumulative devaluations on Taiwan's exports and imports......Page 49
Figure 2.7 Impact of Asian cumulative devaluations on Singapore's exports and imports......Page 50
Figure 2.8 Impact of Asian cumulative devaluations on Japan's exports and imports......Page 51
Western Europe and Oceania......Page 52
China......Page 53
Figure 2.9 Impact of Asian cumulative devaluations on China's exports and imports......Page 54
Table 2.9 Change of bilateral trade flows from the base (current price, with productivity shock, Chinese devaluation included......Page 55
Conclusion......Page 57
3  Impact on the United States......Page 60
Figure 3.1 Impact of Asian cumulative devaluations on United States exports and imports......Page 61
Table 3.1 Impact of Asian cumulative devaluations on US trade and sectoral production (medium-shock scenarios, with and witho......Page 62
Trade Policy Response......Page 63
Table 3.2 US Trade Representative scrutiny of foreign trade and investment barriers......Page 64
Table 3.3 Correlations, 1984-93......Page 65
Table 3.4 Bilateral trade conflict......Page 66
Table 3.5 Determinants of success......Page 67
Table 3.6 Impact on US trade relations......Page 68
Conclusion......Page 70
Appendix A Algebraic Description of the Model......Page 72
Production......Page 73
Demands......Page 74
International Shipping......Page 75
Price System......Page 76
Figure A.3 Price system......Page 77
Choice of Macro Closure......Page 78
Box A.1 Notation......Page 80
Table A.1 Price equations......Page 81
Trade and Final Demand Equations......Page 82
International Shipping Equations......Page 83
Table A.4 International shipping equations......Page 84
Table A.5 Income and savings equations......Page 85
Table A.6 General equilibrium conditions......Page 86
Table A.7 Definitions of variables......Page 87
Table A.8 Definitions of parameters......Page 89
Appendix B Sectoral Definitions and Their GTAP- ISIC Concordance......Page 90
Appendix B Sectoral definitions and their GTAP- ISIC concordance......Page 91
Appendix C Sensitivity Analyses......Page 93
Table C.1 Change of bilateral trade matrix from the base (current price with productivity shock, Chinese devaluation excluded......Page 94
Table C.2 Change of bilateral trade matrix from the base (current price with productivity shock, Chinese devaluation excluded......Page 95
Appendix D Elasticities......Page 96