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Asian financial crisis hit the most fast developing and successful economies in the world. The Asian financial crisis snowballed in July 1997. This led to similar crises in many countries in Asia.
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Introduction Asian financial crisis hit the most fast developing and successful economies in the world. The Asian financial crisis snowballed in July 1997. This led to similar crises in many countries in Asia. Economists, initially viewed Asia's economic fall through the lens of conventional currency-crisis theory. The first theory by "Krugman 1979, Flood and Garber 1984", focuses mainly on the exchange rate. A government with persistent money, financed budget deficits was assumed to use a limited stock of reserves to peg its exchange rate; this policy would, of course, ultimately be unsustainable and the attempts of investors to anticipate the inevitable collapse would generate a speculative attack on the currency when reserves fell to some critical level. The second theory by "Obstfeld 1994, 1995" is less mechanical, a government chooses whether or not to defend a pegged exchange rate by making a tradeoff between short-run macroeconomic flexibility and longer-term credibility....
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