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Working Paper
Crisis, contagion, and country funds: effects on East Asia and Latin America
Spillovers effects, from one country or region to other countries and regions, have attracted renewed attention in the aftermath of the Mexican crisis of December 1994. This paper uses data on closed-end country funds to study how a negative shock in Mexican equities is transmitted to Asia and Latin America, and to particular countries within each region. Country funds allow us to study the transmission to other fund net asset values (NAVs) and prices, which are traded in local stock markets in New York, respectively. The evidence indicates that shocks such as the Mexican crisis produce ...
Working Paper
Is pegging the exchange rate a cure for inflation? East Asian experiences
A common argument for pegging the exchange rate is that it enforces discipline on domestic monetary policy, thus stabilizing inflation expectations. This paper argues that this reasoning does not necessarily apply to East Asia, as the nominal exchange rate pegging policies of these economies are not the explanation for their low inflation. On the contrary, since 1985, those economies whose currencies have appreciated less against the U.S. dollar have tended to experience higher inflation. Factors other than pegging, such as rapid growth, sustainable budget deficits, and relative openness ...
Report
Capital flows & current account deficits in the 1990s: why did Latin America & East Asian countries respond differently?
The return of private capital to highly indebted less-developed countries (LDCs) in the late 1980s was accompanied by widening current account deficits in the recipient countries, which were primarily attributed to a consumption boom in Latin America and an investment surge in East Asia. Interpreting the return as an increase in the external debt ceiling, the maximum amount that can be borrowed, this paper analyzes and compares the different response of the two regions using the conceptual framework of a borrowing-constrained agent. According to it, an increase in the debt ceiling can reduce ...
Working Paper
ASEAN in a regional perspective
There are two striking conventional wisdoms about the status of regional trading blocs in East Asia. The first is that the only formal regional arrangement in the area, ASEAN, does not in fact function as an economic bloc. Trade among the members is thought to be very low. The second is that East Asia taken as a whole does function as a trading and investment bloc, under Japanese direction, and increasingly so over time. This despite the absence of any formal preferential trading area among these countries. This characterization of East Asian trading patterns is not entirely correct. ; ...
Working Paper
Was there a boom in money and credit prior to East Asia's recent currency crisis?
This paper assesses the relationship between money and credit and episodes of sharp depreciation in East Asia by (i) examining growth rates of money and credit variables around depreciation episodes; (ii) estimating the impact of money and credit variables on the probability of a share depreciation episode using logit models; (iii) evaluating the signals contained in money and credit variables prior to episodes of sharp currency depreciation. Reserve money grew rapidly prior to the 1997 currency crisis in East Asia. However, signs of a money or credit boom based on other indicators were ...
Journal Article
East Asia's effect on the Twelfth District
Journal Article
Did a boom in money and credit precede east Asia's recent currency crisis?
This paper assesses the relationship between money and credit and episodes of sharp depreciation in East Asia by: (i) examining the growth rates of money and credit variables around depreciation episodes; (ii) estimating the impact of money and credit variables on the probability of a sharp depreciation episode using logit models; (iii) evaluating the signals contained in money and credit variables prior to episodes of sharp currency depreciation. ; Reserve money grew rapidly prior to the 1997 currency crisis in East Asia. However, signs of a money or credit boom based on other indicators ...
Working Paper
Capital flows and monetary policy in East Asia