Onset of the east Asian financial crisis

This report contends that the magnitude of the crisis is a direct result not of the macroeconomic and microeconomic problems that, howbeit significant, have beset the East Asian economies, but of the policy choices made in reaction to them. The report defines different types of financial crises from a historical perspective, and explains why the crises in East Asia were not anticipated by key market participants until the end of 1996 and, in general, until mid-1997, following the devaluation of the Thai Baht. The report also reviews the events that triggered the crises, and critiques the early role of the International Monetary Fund (IMF) in managing financial policies in the region up to December 1997. The report covers the period only up to this date and provides no policy recommendations for the future; these goals are left for a companion study (PN-ACC- 890). Some observations about future directions of research are made in conclusion. Includes references.