creditors in the event of a withdrawal of foreign capital. Since the available short-term assets
can=t cover all of the short-term liabilities, each creditor knows that the last short-term creditors
to withdraw their funds will actually not be repaid on time (since the economy simply lacks the
liquid assets to pay off all creditors on short notice).
The evidence in favor of the panic interpretation in Asia is both indirect and direct. The
indirect evidence has two main parts. First, the crisis was unanticipated, suggesting that it can not
be easily explained by fundamentals. Almost no one who was closely watching Asia in the months
before the crisis, even those who were deeply familiar with Asia=s flaws, predicted an economic
meltdown. Second, even ex post, it is hard to find fundamental explanations commensurate with
the depth of the crisis. The problems that Asia=s critics now point to should have led to a growth
slowdown, or even a recession, not a deep contraction and implosion of both the banking and
corporate sectors.
The direct evidence has three main parts. First, the crisis hit only countries that were in a
vulnerable position, i.e. with high levels of short-term foreign debt relative to short-term foreign
assets. No emerging market with low levels of short-term debt relative to reserves was hit, even
those with high levels of corruption and weak banking systems. Second, the crisis hit several
countries with widely varying economic structures and fundamentals within a relatively short
period of time. Korea and Indonesia had relatively little in common at the time of the crisis,
except the levels of short-term debt and a common geographical region. Third, the crisis eased up
after about one year, even though several fundamental conditions (e.g., corporate and bank
financial health) were not significantly improved. The most striking example is Indonesia, where
the rupiah appreciated substantially between mid-July and the end of October, starting only weeks
after the chaos surrounding the resignation of Suharto. This can hardly be interpreted as a return
of investor confidence, since most investors are even more uncertain about Indonesia=s future in
the wake of Suharto=s downfall, and the ensuing political and social instability. The easing of the
crisis reflects, in our interpretation, the end of the short-term outflows of capital. As debts were
repaid, rescheduled, or defaulted upon, there was little foreign capital left to flee. As the net
capital outflows subsided, the intense pressure on the exchange rate ended, and the overshooting
caused by financial panic was reversed.
Exchange Rate Devaluation?
Some observers have attributed the recent crises to the devaluations of the Thai baht, the
Korean won, the Russian ruble, etc., and believe that there would have been no crises had these
countries simply maintained the pegged exchange rates. One variant holds that a currency board
arrangement, a la Argentina, would have saved these countries from the crisis. We believe that
this policy view is completely off the mark, and reflects the fallacy of post hoc, ergo propter hoc.
The sliver of truth in this view is that the deep recessions in Mexico (1995), Thailand
(1997), Korea (1997), and Russia (1998), indeed tended to follow closely after devaluations of
the exchange rate. On the other hand, Argentina (1995) and Hong Kong (1998) suffered severe
recessions despite their being on a currency board system. At the same time, there are many
creditors in the event of a withdrawal of foreign capital. Since the available short-term assetscan=t cover all of the short-term liabilities, each creditor knows that the last short-term creditorsto withdraw their funds will actually not be repaid on time (since the economy simply lacks theliquid assets to pay off all creditors on short notice). The evidence in favor of the panic interpretation in Asia is both indirect and direct. Theindirect evidence has two main parts. First, the crisis was unanticipated, suggesting that it can notbe easily explained by fundamentals. Almost no one who was closely watching Asia in the monthsbefore the crisis, even those who were deeply familiar with Asia=s flaws, predicted an economicmeltdown. Second, even ex post, it is hard to find fundamental explanations commensurate withthe depth of the crisis. The problems that Asia=s critics now point to should have led to a growthslowdown, or even a recession, not a deep contraction and implosion of both the banking andcorporate sectors. The direct evidence has three main parts. First, the crisis hit only countries that were in avulnerable position, i.e. with high levels of short-term foreign debt relative to short-term foreignassets. No emerging market with low levels of short-term debt relative to reserves was hit, eventhose with high levels of corruption and weak banking systems. Second, the crisis hit severalcountries with widely varying economic structures and fundamentals within a relatively short
period of time. Korea and Indonesia had relatively little in common at the time of the crisis,
except the levels of short-term debt and a common geographical region. Third, the crisis eased up
after about one year, even though several fundamental conditions (e.g., corporate and bank
financial health) were not significantly improved. The most striking example is Indonesia, where
the rupiah appreciated substantially between mid-July and the end of October, starting only weeks
after the chaos surrounding the resignation of Suharto. This can hardly be interpreted as a return
of investor confidence, since most investors are even more uncertain about Indonesia=s future in
the wake of Suharto=s downfall, and the ensuing political and social instability. The easing of the
crisis reflects, in our interpretation, the end of the short-term outflows of capital. As debts were
repaid, rescheduled, or defaulted upon, there was little foreign capital left to flee. As the net
capital outflows subsided, the intense pressure on the exchange rate ended, and the overshooting
caused by financial panic was reversed.
Exchange Rate Devaluation?
Some observers have attributed the recent crises to the devaluations of the Thai baht, the
Korean won, the Russian ruble, etc., and believe that there would have been no crises had these
countries simply maintained the pegged exchange rates. One variant holds that a currency board
arrangement, a la Argentina, would have saved these countries from the crisis. We believe that
this policy view is completely off the mark, and reflects the fallacy of post hoc, ergo propter hoc.
The sliver of truth in this view is that the deep recessions in Mexico (1995), Thailand
(1997), Korea (1997), and Russia (1998), indeed tended to follow closely after devaluations of
the exchange rate. On the other hand, Argentina (1995) and Hong Kong (1998) suffered severe
recessions despite their being on a currency board system. At the same time, there are many
การแปล กรุณารอสักครู่..