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Title: Accounting for the East Asian crisis : a quantitative model of capital outflows in small open economies
Authors: Cook, David E.
Devereux, Michael B.
Keywords: East Asian crisis
Sticky prices
Small open economy
Issue Date: 2002
Abstract: This paper conducts a quantitative investigation of the East Asian crisis, within a calibrated dynamic general equilibrium model. The central question addressed by the paper is this; to what extent can the crisis can be accounted for by the measured shocks to country risk-premia? The model is calibrated to match three East Asian economies: Thailand, Korea, and Malaysia. Using published data on country-risk premium, we find that a single interest rate shock of the size observed can explain a large share of the real sectoral outcomes in those countries, especially in Korea and Thailand. The model has more difficulty explaining the large exchange rate devaluations that occurred in those economies.
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