What caused the Asian currency and financial crisis?

The paper explores the view that the Asian currency and financial crises in 1997 and 1998 reflected structural and policy distortions in the countries of the region, even if market overreaction and herding caused the plunge of exchange rates, asset prices and economic activity to be more severe than warranted by the initial weak economic conditions. The first part of the paper provides an overview of economic fundamentals in Asia on the eve of the crisis, with emphasis on current account imbalances, quantity and quality of financial ‘overlending’, banking problems, and composition, maturity and size of capital inflows. The second part of the paper presents a reconstruction of the Asian crisis from the antecedents in 1995–1996 to the recent developments in early 1999 in parallel with a survey of the debate on the strategies to recover from the crisis, the role of international intervention, and the costs and benefits of capital controls.     

Unsustainable sovereign debt—is the Euro crisis only the tip of the iceberg?

As a direct effect of the financial crisis in 2008, public debt began to accumulate rapidly, eventually leading to the European sovereign debt crisis. However, the dramatic increase in government debt is not only happening in European countries. All major G7 countries are experiencing similar developments. What are the implications of this kind of massive deficit and debt policy for the long term stability of these economies? Are there limits in debt-ratios that qualitatively change policy options? While theory can easily illustrate these limits, where are these limits in real economies? This paper examines the relationship between sovereign debt dynamics and capital formation, and accounts for the effects of the 2008 financial crisis on debt sustainability for the four largest advanced economies. We contribute to the literature on fiscal sustainability by framing the problem in an OLG model with government debt, physical capital, endogenous interest rates, and exogenous growth. For the calibration exercise we extract data from the OECD for Germany as a stabilization anchor in Europe, the US, the UK, and Japan for almost two decades before the 2008 crisis. Except for intertemporal preferences, all parameters are drawn or directly derived from the OECD database, or endogenously determined within the model. The results of the calibration exercise are alarming for all four countries under consideration. We identify debt ceilings that indicate a sustainable and unsustainable regime. For 2011 all four economies are either close to, or have already passed the ceiling. The results call for a dramatic readjustment in budget policies for a consolidation period and long-term fiscal rules that make it possible to sustain sufficient capital intensity so that these economies can maintain their high income levels. Current conditions are already starting to restrict policy choices. However, the results also make it very clear that none of these economies would survive a second financial crisis such as the one in 2008.     

Lessons from the global financial crisis – the case of Mainland China and Hong Kong

Abstract

The analysis of the intertwined reactions of Hong Kong and Mainland China to the 2008 Global Financial Crisis is considered in this study through the lenses of their stock markets. The GARCH-based analysis of stock market performance over the period December 2011–December 2014 shows that trade and equity sectors were the sectors most affected by the global recession; volatility was prevalent on the Shanghai stock market, whereas volatility persistence characterised the Hong Kong stock market. The results also show that the two stock markets recovered quite quickly. Tight controls applied by the financial authorities helped ensure some stability during the crisis.     

Volatifity spillovers on precious metals markets and the G-7： The effects of the Asian crisis

This paper investigates the nature of volatility spillovers between stock returns and precious metals returns for the G-7 countries over the 1995-2006 period. We divide our sample into a number of sub periods, prior to, during and after the Asian crisis, with the objective to provide a wide analysis of the behaviour of these two markets taking into account the effects of the Asian crisis; We use EGARCH modelling, which takes into account whether bad news has the same impact on volatility as good news. The results show that there is no evidence of volatility persistence from stock returns to precious metals returns, but overall the results are significant in the other way around. In terms of volatility spillovers effects, the main findings are that there is evidence of volatility spill over running in a bidirectional way in almost all the cases. And finally, the results from asymmetric spillovers effects show that negative news has a stronger impact in these financial markets than positive news.     

Sowing the seeds for the subprime crisis: does global liquidity matter for housing and other asset prices?

We assess the relationship between global liquidity and two important classes of asset prices on a global scale. For this purpose, we estimate a variety of VAR models for the global economy using aggregated data which represent the major OECD countries. According to the impulse responses obtained a positive shock to global liquidity raises the global house price index and later on via commodity prices also the global GDP deflator to the same extent. Hence, we conclude that there are subsequent spill-over effects from house prices to the overall price level. However, we are not able to find any empirical evidence in favor of the hypothesis that stock prices significantly react to changes in global liquidity.

Measuring model of financial crisis for public company

The paper puts forward the method of fuzzy overall evaluation of financial crisis for public company according to the problems on measuring financial crisis, which is difficult to evaluate with an objective and precise way. A systematic measurement index system has been described. With a multi-layer structure built up using the AHP method, and weights obtained using the FAHP method for the factors, a multi-level and multi-target fuzzy mathematic model has been established for measuring financial crisis. Financial crisis forecasting can control risks and decrease losses.     

De-industrialisation in sub-Saharan Africa: myth or crisis?

This article examines the de-industrialisation hypothesis inthe context of recent developments in Sub-Saharan Africa (SSA).Alternative versions of de-industrialisation are consideredand a methodology for testing for such effects is put forward.This involves a cross-country analysis using a panel data approachwith regional and time period, as well as country dummies. Atthe regional level no specific Africa effect can be identified.To allow for diversity of experience within SSA, country residualsfrom the benchmark equation are also considered and here thereis some evidence of de-industrialisation in seven out of the16 African economies for which data were available.     

Korean financial crisis during 1997–1998 Causes and challenges

This paper analyzes the underlying causes of the Korean financial crisis during 1997–98 period. How the economic growth strategies adopted by Korean government have influenced the current-state financial turbulence is analyzed in a historical manner. Root causes of Chaebol problems are also investigated in relations to government policies and weakened financial sector. Further, the effectiveness of external remedy programs such as IMF bail-out package are critically assessed. Finally, the paper concludes with the observation that, despite the current crisis, the Korean economy still possesses strong fundamentals, therefore, the economic recovery is soon to be obtained with continuous reform efforts.     

Asia’s contagious financial crisis and its impact on Korea

Asian countries have, from 1965 to the early 1990s, shown remarkable growth performance. The recent financial crisis, however, has brought disastrous effects on these growing economies. The region has been suffering from high inflation, massive unemployment, and large drops in growth rates. The major cause of the crisis can be attributed to the international financial markets. International financial institutions lent without serious examination of the borrowers’ ability to repay. In this regard, the ratings agencies were also responsible for the worsening of the crisis. Their ratings did not give correct signals to the lenders. The borrowers’ speculative activities and their subsequent failures were a direct cause that led to the crisis. A second cause lies in the structural problems in these economies. There are still covert dealings between government officials and businesses, and these economies lack transparency. These deficiencies greatly distort allocation of resources in the economies. There should be a global risk-management system to prevent such a crisis from happening again. This risk-management system would give an early warning signal. Creditors should coordinate their efforts to resolve the liquidity crisis in the Asian countries. Coordinated loans and partial forgiving of debts will be helpful to both debtors and creditors.     

Conditional crisis? Ecological challenges and conditions of growth during the agricultural revolution in southern Sweden,c. 1700–1900†

Was there an agro‐ecological crisis in Europe which preceded and contributed to pushing forward the agricultural revolution? This article presents a new theoretical and empirical approach to this controversial perspective on agricultural transformation and relates to an ongoing debate on conditions of growth in pre‐industrial societies. The results demonstrate that there were indeed indicators of a crisis, which grew stronger during the eighteenth century and culminated in the early nineteenth century. The crisis was, however, not general, but was rather restricted to areas that stand out due to poor natural conditions for agriculture. In other words, the crisis was conditional. Furthermore, the findings show that the crisis could push forward changes that were important for enabling agricultural transformation and growth. However, both the emergence and reversal of the crisis were connected to new opportunities opened up by market development. Enough differences were found between different types of regions to suggest that there were many development paths within the agricultural transformation process, and that they were not necessarily linear.     

The East Asian crisis and financing corporate investment: is there a cause for concern?

In view of limited empirical evidence concerning the microeconomic aspects of corporate financial problems in the East Asian countries in the 1990s, this paper analyses the financing pattern of corporate investment in Indonesia, Korea, Malaysia, and Thailand. The analysis is based on an unbalanced panel of listed firms during the period 1989–1997. By using firm size, retention practices, and leverage as three different indicators of financial constraint on firm investment, we have examined the role of various internal and external financing variables on corporate investment in the sample countries. Results indicate that a large number of sample firms depend on free cash flow, especially in Indonesia; there was also a steady increase in debt-equity ratio in all countries. There were signs of agency costs in the use of cash flow in Korea and Malaysia and also in the use of debt financing in Malaysia and Thailand. There was also sign of over-investment among the Thai firms during 1994–1997 though it appears very little if at all was done to redress it in time.     

On the Confirmation of the Goodwill

The goodwill is widely existing in modem corporation＇s management, and becoming a corporation＇s important and economic resources more and more, it has become a commonplace that goodwill can bring the corporation the competence that exceeds the average profit horizontal of the industry and economic benefits. Therefore, the goodwill also becomes the important contents that accountancy checks increasingly, among them; the confirmation of goodwill is a basic problem in the accountancy.     

Promoting the Reforming of the Processing Trade

On April 4th, 2006, Beijing City Bureau of Commerce issued it would apply for the logistics function for Shunyi District Tianzhu Export Area of Beijing City, build the Konggang freetrade logistics center, and declare to the Beijing Economic development zo…     

Economic crisis： Using M ｜ G ｜ ∞ queue systems busy period to solve logistics problems in an organization

The recent economic developments in the world have shown how important it is to solve the logistics problems of machine failures in an expedite way. A model based on queues theory to solve these failures is presented. Using this model with M ｜ G ｜ ∞ queuing systems, customers arrive according to a Poisson process at rate A. Each of them receives, immediately after its arrival, a service whose length is a positive random variable with distribution function G（.） and mean value α. An important parameter of the system is the traffic intensity ρ =λα The service of a customer is independent of the services of the other customers and of the arrival process. The busy period of a queuing system begins when a customer arrives there, finding it empty, and ends when a customer leaves the system letting it empty. During the busy period, there is always at least one customer in the system. Therefore, in a queuing system, there is a sequence of idle and busy periods. For these systems with infinite servers the busy period length distribution is difficult to derive, except for a few exceptions. But formulae that allow the calculation of some of the busy period length parameters for the M｜ G ｜ ∞ queuing system are presented. These results can be applied in logistics （Ferreira, 2002; Ferreira, 2003; Ferreira, Andrade ＆ Filipe, 2009）. For instance, they can be applied to the failures which occur in the operation of an aircraft, shipping or trucking fleet. The customers are the failures. And their service time is the time that goes from the instant at which they occur till the one at which they are completely repaired. Here a busy period is a period in which there is at least one failure waiting for reparation or being repaired. The formulae referred allow the determination of measures of the system performance.     

On the choice of an anchor for the GCC currency: does the symmetry of shocks extend to both the oil and the non-oil sectors?

This paper assesses the costs of forming a monetary union among the Gulf Cooperation Council (GCC) countries by looking at economic linkages within the GCC, and between the GCC and the potential anchors (the US, and major European countries such as France, Germany and Italy) for their proposed new currency. We investigate the importance of the US dollar compared to the Euro by focusing on aggregate demand (AD) and aggregate supply (AS) shock symmetry across these countries. We differentiated between oil and non-oil sector by estimating structural vector autoregression (SVAR) models with a combination of variables: oil output, non-oil output, total output, nominal/real price of oil and overall price level. One set of models was identified with the long-run restrictions of Blanchard and Quah (Am Econ Rev 79(4):655–673, 1989), whereas the set that assesses the robustness of the findings was estimated with the short-run restrictions of Sims (Eur Econ Rev 36(5):975–1000, 1992). We find overwhelming support for AD shock symmetry across the GCC countries and between the GCC and the US, but none for the major European countries with the GCC. Non-oil AS shocks are mostly asymmetric, but oil AS shocks are mostly symmetric when the real price of oil is included. This agrees with the view that GCC countries are subjected to common oil shocks. It also suggests that previous VAR models estimated to pass judgment on the feasibility of monetary union across GCC countries may have suffered from problems of mis-specification if the real price of oil was not considered. We surmise that the US dollar is a better anchor candidate for anchoring the new GCC currency than the Euro, since US monetary policy can at least help smooth demand shocks in these countries.