Asia’s Post-Global Financial Crisis Adjustment: A Model-Based Dynamic Scenario Analysis. Asian Development Review, Vol. 27(2), pp. 122-151
Kawai, Masahiro; Zhai, Fan | August 2010
Abstract
Using a dynamic global general equilibrium model, the paper assesses the
short- and medium-term impacts of the global financial crisis for Asian
economies and the implications of post-crisis adjustment in East Asia for the
world economy. The analysis suggests that East Asia may not be severely hit
permanently by the global financial crisis, and that a worldwide fiscal
stimulus could play an important role in stabilizing the global economy in
crisis. East Asia’s efforts toward strengthening regional and domestic
demand, in conjunction with more flexible exchange rate regimes, will
promote more balanced regional growth, facilitating an orderly global
rebalancing. However, despite the growing size of emerging East Asia in the
global economy, the region’s growth rebalancing has only modest spillover
effects on the rest of the world. Emerging East Asia can contribute to global
growth, but it alone cannot become the sole engine leading post-crisis growth
in the world economy.