Speculative attack theory and currency crisis in Korea

Author(s):  
Changkyu Choi
2012 ◽  
Author(s):  
Guan Choo Lim

Kesan makroekonomi fundamental ke atas tekanan pasaran (MP) ditafsir menggunakan model generasi ketiga berasaskan jangkaan ‘adaptif’ Dusenberry. Hasil kajian ini tekal dengan anggapan umum bahawa fundamental makroekonomi yang lemah telah mengakibatkan serangan ke atas matawang negara–negara Asia. Walau bagaimanapun, variabel makroekonomi serta dinamik variabel tersebut yang membawa kepada krisis agak berbeza di Malaysia dan Indonesia. Serangan spekulatif terhadap rupiah berlaku dalam keadaan makroekonomi yang lemah manakala tekanan terhadap Ringgit Malaysia dikaitkan dengan pertumbuhan kredit, defisit fiskal dan kadar pertukaran benar. Kesimpulannya, fundamental yang mempengaruhi jangkaan pasaran dan seterusnya tekanan pasaran (MP) mungkin sama tetapi dinamik yang membentuk jangkaan pasaran amat berbeza. Oleh yang demikian, anggapan bahawa ekonomi Asian mempunyai ciri–ciri yang sama sehingga mengakibatkan krisis matawang 1997 mungkin tidak benar. Kata kunci: krisis matawang; Indonesia; Malaysia; fundamental The impact of selected macroeconomic fundamentals on the market pressure (MP) is assessed using the third generation models based on ‘Dusenberry’ adaptive expectations. The findings are consistent with the general belief that weak macroeconomic fundamentals had triggered the speculative attacks against the Asian currencies. However, the macroeconomic variables and their dynamics that set the groundwork for a currency crisis differ considerably in Malaysia and Indonesia. A speculative attack against the Rupiah occurred in a generalized state of macroeconomic weakness while domestic credit growth, the fiscal balances–GDP ratio and the real exchange rate exerted strong influence on the exchange market pressure for Malaysia. In conclusion, while there are some common fundamentals matter for shifting market expectations and hence, market pressure in both countries, the dynamics that formed market expectations are divergent. Therefore, the belief that the Asian economies had the same characteristics that triggered the currency crisis in 1997 may be incorrect. Key words: currency crisis; Indonesia; Malaysia; fundamentals


Author(s):  
Christopher Hood ◽  
Rozana Himaz

This chapter describes fiscal squeeze in an era of high political volatility and major economic challenges, including mass unemployment, a sharp increase in oil prices, double-digit inflation (i.e. a period of ‘stagflation’), and high levels of trade union militancy. The most dramatic period during the episode occurred in 1976, involving a split Labour Government under two different leaders, with a leadership election following a sudden prime ministerial resignation. That government pursued fiscal squeeze against the background of a deep currency crisis and bailout deals with outside lenders (the US Government and the IMF). The squeeze episode also led to some important institutional developments, producing the first major privatization since the 1950s and a new system of controlling public spending through ‘cash limits’.


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