The Asian currency crash: were badly driven fundamentals to blame?

Husted, S. and MacDonald, R. (1999) The Asian currency crash: were badly driven fundamentals to blame? Journal of Asian Economics, 10(4), pp. 437-550. (doi: 10.1016/S1049-0078(00)00031-2)

Abstract

This paper examines the extent to which a number of currencies central to the Asian currency crisis were misaligned at the end of 1996. A well-known fundamentals-based exchange rate model, the monetary approach to exchange rate behavior, is used to produce estimates of equilibrium exchange rates for a number of Asian currencies. The estimates, calculated using panel methods, are shown to be consistent with the underlying model. Most significantly, very little evidence of misalignment is found to exist in 1996. This suggests that the cause of the Asian crash cannot be attributed to traditional fundamentals.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: MacDonald, Professor Ronald
• Authors: Husted, S., and MacDonald, R.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Journal of Asian Economics
• Publisher: Elsevier
• ISSN: 1049-0078
• ISSN (Online): 1873-7927