The asian financial crisis, uphill flow of capital, and global imbalances
Subtitle: evidence from a micro study
By: Brahima Coulibaly and Jonathan Millar.
Contributors: Millar, Jonathan.
Series: International finance discussion papers -- no. 942; International finance discussion papers (Online) -- no. 942.
Publisher: Federal Reserve Board
Published: 2008
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Description: "This study assesses the role of the Asian financial crisis of the late 1990s in the emergence and persistence of the large current account surpluses across non-China emerging Asia, which have been a significant counterpart to the U.S.  current account deficit.  Using panel data encompassing nearly 3,750 firms, we trace the current account surpluses to a marked and broad-based decline in corporate expenditures on fixed investment in the aftermath of the crisis that cuts across a wide spectrum of countries, industries, and firms.  The lower corporate spending in turn depressed aggregate investment rates, widened the saving-investment gap, and allowed the region to turn into a net exporter of capital.  We then consider the factors behind this reduction in postcrisis corporate investment.  While weaker firm-level fundamentals in the postcrisis period seem to explain part of the drop in investment rates, ongoing re-structuring owing to large debts accumulated and excess investment undertaken in the run-up to the crisis has been the main source of restraint postcrisis corporate investment.  The results suggest that even after a decade, the effect of the financial crisis is still affecting corporate investment decisions in emerging Asia, and that as the restructuring completes its course, investment rates will likely rise to contribute to a gradual reduction in the region's current account surpluses"--Federal Reserve Board web site.
Notes: Title from PDF file as viewed on 6/18/2009.

Includes bibliographical references.

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Mode of access: World Wide Web.