TY  - JOUR
AU  - Radelet, Steven
AU  - Sachs, Jeffrey
TI  - The Onset of the East Asian Financial Crisis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6680
PY  - 1998
Y2  - August 1998
DO  - 10.3386/w6680
UR  - http://www.nber.org/papers/w6680
L1  - http://www.nber.org/papers/w6680.pdf
N1  - Author contact info:
Steven Radelet
Center for Global Development
E-Mail: sradelet@cgdev.org

Jeffrey D. Sachs
Center for Sustainable Development, The Earth Institute
Columbia University
535 West 116th Street, MC 4327
New York, NY  10027
Tel: 212/854-8704
Fax: 212/854-8702
E-Mail: sachs@columbia.edu
M1  - published as Steven Radelet, Jeffrey Sachs. "The Onset of the East Asian Financial Crisis," in Paul Krugman, editor, "Currency Crises" University of Chicago Press (2000)

AB  - This paper provides an early diagnosis of the financial crisis in Asia, focusing on the empirical record in the lead-up to the crisis.  The main goal is to emphasize the role of financial panic as an essential element of the Asian crisis.  At the core of the crisis were large-scale foreign capital inflows into financial systems that became vulnerable to panic.  The paper finds that while there were significant underlying problems and weak fundamentals besetting the Asian economies at both a macroeconomic and a microeconomic level, the imbalances were not severe enough to warrant a financial crisis of the magnitude that took place in the latter half of 1997.  A combination of panic on the part of the international investment community, policy mistakes at the onset of the crisis by Asian governments, and poorly designed international rescue programs turned the withdrawal of foreign capital into a full-fledged financial panic, and deepened the crisis more than was either necessary or inevitable.
ER  -