ABSTRACT
In the second half of 1997, five countries in East and Southeast Asia – Thailand, Indonesia, Malaysia, Korea, and the Philippines – experienced financial crises comparable with those that had previously struck Chile and Mexico. Other countries in the region besides these five (I shall refer to the five as the “Asian crisis” countries) were also affected, but did not suffer the severe dislocations undergone by these five. It is fair to say that this regional crisis was almost entirely unexpected, and that its indirect repercussions have been worldwide and long-lasting, with some tracing the 2008 international Great Recession in part to policy changes among emerging market economies that were prompted by the experience of the Asian crisis. This chapter attempts to unravel why this crisis happened, and what lessons it offers for macroeconomic management in actual or aspiring emerging economies.
