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Was the Asian crisis a wake-up call?

Digging deeper into the self-protection rationale for holding reserves, this paper examines the empirical link between reserve holding patterns and crisis vulnerability, comparing the pre- and post-Asian crisis periods, and across different groups of deve

yan jing

on 19 April 2010

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Transcript of Was the Asian crisis a wake-up call?

Was the Asian crisis
a wake-up call?

Yan Jing and Guo Huihui Are developing countries self-protectingmore after the Asian crisis, compared to before the crisis? Are especially vulnerable countries self-protecting more when compared to developing countries more generally? Is China’s reserve holding strategy exceptional when compared to other developing countries? Past financial and economic crises in the developing world
need on possible steps towards better crisis
prevention and mitigation,to try and protect themselves against the
vicissitudes of the international capital markets.
between1986-2005,the global stock of reserves held by both industrial and developing countries increased dramatically.
Resurgence in global reserve holding only really started to take place since 1998 (Fig. 1), and
developing countries are mainly driving this reserve holding trend (see also Fig. 2). data and empiricalmethodology

where Yit is the ratio of international reserves to GDP and Xit is a vector of possible explanatory variables for reserves Country- and (post-Asian crisis) period-specific interaction terms are then added in order to distill possible differences in reserve holding patterns across different (groups of) countries and between the pre- and post-Asian crisis periods (Eq. (2)). regression results and analysis The Asian crisis was a wake-up call
Reserve holding elasticities are different across countries
Based on the broad array of crisis vulnerabilities, three distinet groups of countries are identified ,and their reserve holding patterns analyzed:
(a) commodity dependent exporters;
(b)countries with histories of debt defaults;
(c) countries prone to sudden stops in their capital inflows. China’s reserve holding pattern is not exceptional why we should analysis the crisis? 1995, Mexican tequila 1997–1998, Asian flu 1998, Russian default 1999 Brazil crisis 2001 Turkey 2002 Argentina banks close down
industry depression
globle stocks frustrated
Bankruptcy continuous
Decline in employment
Reduce expenditure
the great effect of
financial crisis Banks close down industry depression Decline in employment globle stocks frustrated Reduce expenditure introduction
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