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A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy

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  • Otsu Keisuke

    (Sophia University)

Abstract

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).

Suggested Citation

  • Otsu Keisuke, 2010. "A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-39, July.
    • Handle: RePEc:bpj:bejmac:v:10:y:2010:i:1:n:17
    DOI: 10.2202/1935-1690.1980
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    More about this item

    Keywords

    business cycle accounting; small open economy; Asian crisis; TFP;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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