ABSTRACT
The Korean economy was on a rollercoaster ride for the three years from 1997-1999. It suffered from the deepest recession since its takeoff in the 1960s and achieved a brisk recovery that surprised the whole world. It successfully altered a flood of criticism into a deluge of complements. Behind this turn-around lay a dramatic swing in macroeconomic policies. More fundamentally, of course, Korean crisis was caused by the fragile financial structure of the whole economy. In particular, when this behavior is heavily geared toward short-term foreign debts, public or private, the economy becomes highly susceptible to a simultaneous crisis in both domestic and foreign currency finances, a twin crisis. In this regard, structural reforms led by the IMF greatly helped the Korean economy in the long run, added more pain to already struggling economy in the short run. Yet, the long-run benefits of blessing might have been realized more smoothly if more appropriate macroeconomic policies had been taken.
