(DP 1998-05) Bubbles, Monetary Policy and the Asian Currency Crisis

Raul V. Fabella

Abstract


We propose a life cycle of bubbles (from a quiescent stable state to a bubble to its collapse) where the role of monetary management is crucial. We claim that the policy of liberalizing short-term capital and private foreign borrowing (which is a deflationary expansionary monetary policy with stable (pegged exchange rates) combined to precipitate and deepen the Asean bubbles and create unsustainable short- and unhedged forex exposures.

Full Text:

PDF

Refbacks

  • There are currently no refbacks.