Dynamic welfare costs of the 1997 Asian crisis

Empirical Economics volume 37, pages73–92(2009)Cite this article

Abstract

This paper measures and investigates the welfare costs, other effects and recovery process of the 1997 Asian crisis, and evaluates the impact of the policy program supported by the International Monetary Fund (IMF). The main findings are as follows. First, the ratio of ‘whole cost’ to the level of consumption in a hypothetical economy is high: 50% for Indonesia, 39% for Hong Kong, 36% for Korea, 30% for Thailand and 18% for Malaysia. Second, the dynamic process of ‘cost at period t’ quickly converges to 40% immediately after the crisis, though the costs for Indonesia and Hong Kong gradually increase toward 100%. Third, the IMF-supported programs in Thailand, Indonesia and Korea were implemented straight after the peak cost. Finally, the cost of the IMF-supported program was relatively inexpensive compared with the welfare cost of the crisis.

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Author information

Affiliations

  1. Osaka School of International Public Policy, Osaka University, 1-31, Machikaneyama-machi, Toyonaka, Osaka, 560-0043, Japan

    Tatsuyoshi Miyakoshi

  2. Graduate School of Systems and Information Engineering, University of Tsukuba, Tsukuba, Ibaraki, Japan

    Masakatsu Okubo

  3. School of Management, Aoyama Gakuin University, Tokyo, Japan

    Junji Shimada

Authors
  1. Tatsuyoshi Miyakoshi
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  2. Masakatsu Okubo
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  3. Junji Shimada
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Correspondence to Tatsuyoshi Miyakoshi.

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Miyakoshi, T., Okubo, M. & Shimada, J. Dynamic welfare costs of the 1997 Asian crisis. Empir Econ 37, 73–92 (2009). https://doi.org/10.1007/s00181-008-0223-0

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Keywords

  • Dynamic welfare cost
  • Time-varying model
  • 1997 Asian crisis

JEL Classification

  • C32
  • C50
  • E32
  • E20