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Private inflows when crises are anticipated: a case study of Korea - discussion

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  • Carmen M. Reinhart

Abstract

Comment: Michael Dooley and Inseok Shin make a compelling case that the Korean financial crisis of 1997 was not the consequence of a misaligned exchange rate and external imbalance, nor was it the classic first-generation credit-financed fiscal deficit stressed by Krugman (1979). The authors also cast doubt on explanations of the Korean crisis that rely exclusively on a liquiditycrisis/banking panic story, as in Goldfajn and Valdes (1995), or on earlier models with self-fulfilling expectations (see, for instance, Obstfeld, 1994). Instead, they argue that the Korean banking and currency crises had their origins in the financial liberalization that took place in the earlier part of the 1990s.
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Suggested Citation

  • Carmen M. Reinhart, 1999. "Private inflows when crises are anticipated: a case study of Korea - discussion," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
    • Handle: RePEc:fip:fedfpr:y:1999:i:sep:x:13
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    2. Maurice Obstfeld, 1994. "The Logic of Currency Crises," NBER Working Papers 4640, National Bureau of Economic Research, Inc.
    3. Dooley, Michael P, 2000. "A Model of Crises in Emerging Markets," Economic Journal, Royal Economic Society, vol. 110(460), pages 256-272, January.
    4. Ilan Goldfajn & Rodrigo Valdés, 1997. "Balance of Payments Crises and Capital Flows: The Role of Liquidity," Working Papers Central Bank of Chile 11, Central Bank of Chile.
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    More about this item

    Keywords

    Korea; Financial crises;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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