The East Asian Crisis: Investigating Causes and Policy Responses

We use a forward looking modeling framework to capture some of the major interactions
between asset markets and trade involved in the East Asian crisis and its aftermath. We
take the primary cause of the crisis to be a fundamental reassessment of the profitability of
investment in the region, and add secondary shocks resulting from the financial
implications of responses to the initial shock. In this way, we can generate time profiles for
the return of the countries of the region to economic health, and consider issues of
contagion and policy response.