In this paper the authors ask whether the Asian financial crisis was unnecessary. They propose rethinking the Asian financial crisis through the relatively new capital account crisis paradigm, originally proposed by Masaru Yoshitomi. The authors argue that this paradigm provides a much more...

This paper presents a simple model of currency crises which is driven by the interplay between the credit constraints of private domestic firms and the existence of nominal price rigidities. The possibility of multiple equilibria, including a 'currency crisis' equilibrium with low output and a...

This study addresses the need for an early warning system of financial distress of nations, amply demonstrated by failures in Mexico and South East Asia. We find that financial ratios of failing nations, and those of failing corporations, display similar patterns. A neural network was trained on...

A country's financial system is internationally illiquid if its potential short-term obligations in foreign currency exceed the amount of foreign currency it can have access to in short notice. This condition may be necessary and sufficient for financial crises and/or exchange rate collapses...

Two theories of the causes of currency crises prevail in the economic literature. The first traces currency instability to countries' structural imbalances and weak policies; the second identifies arbitrary shifts in market expectations as the principal source of instability. The authors of this...

NOTE: This is a description of the paper and is not the actual abstract. This paper discusses the role of the IMF in the current Asian "economic crisis". It traces the evolution of the IMF policy from macroeconomic policies in currency crises to the current attempt to impose very detailed...

The 1990s currency debacles revitalized the search for early warning and forward-looking indicators of financial vulnerabilities. This paper contributes to this task by proposing an approach to assess central bank solvency and to examine the factors putting it at risk, and by refining the...

Market participants' risk attitudes, wealth and portfolio composition influence their positions in a pegged foreign currency and, therefore, may have important effects on the sustainability of currency pegs. We analyze such effects in a global game model of currency crises with continuous action...

The current IMF programs in Asia go far beyond the traditional role of the IMF. Instead of requiring macroeconomic policies that can achieve the necessary current account improvements, the IMF is intervening in detailed domestic policies in labor markets, corporate structure, banking, specific...

This paper argues that adding endogenous information aggregation to situations where coordination is important - such as riots, self-fulfilling currency crises, bank runs, debt crises or financial crashes - yields novel insights into the multiplicity of equilibria. Morris and Shin (1998) have...