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A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy
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Keisuke Otsu
Published/Copyright:
July 10, 2010
This paper applies the business cycle accounting method à la Chari, Kehoe and McGrattan (2007) to a standard neoclassical small open economy model and assesses the economic crises in Hong Kong, Korea and Thailand. Quantitative results show that distortions in production efficiency are important in all countries in accounting for the sudden output collapses while distortions in the investment and international financial markets are not. If domestic or international financial frictions are the main source of the Asian crisis, they must have operated through total factor productivity (TFP).
Published Online: 2010-7-10
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Keywords for this article
business cycle accounting;
small open economy;
Asian crisis;
TFP
Articles in the same Issue
- Topics Article
- Endogenous Growth, Habit Formation and Convergence Speed
- Implementing Optimal Monetary Policy in New-Keynesian Models with Inertia
- Capital Markets Integration and Labor Market Institutions
- The Role of the Real Interest Rate in U.S. Macroeconomic History
- Price Dynamics and Asymmetric Business Cycles under Mixed State and Time Dependent Pricing Rules
- The Link between the Economic Structure and Financial Development
- The Optimum Quantity of Money Revisited: Distortionary Taxation in a Search Model of Money
- Sufficient Conditions for Finite Objective Functions in DSGE Models with Deterministic and Stochastic Trends
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