Working Paper: CEPR ID: DP9802
Authors: Maurice Obstfeld
Abstract: Stanley Fischer is a rarity among economic policymakers. He came to the policy world as an internationally recognized intellectual leader on macroeconomic theory and policy. He confronted numerous emerging market crises, including the globally systemic Asian crisis, as the IMF?s First Deputy Managing Director from September 1994 to August 2001. And then, as governor of an emerging economy?s central bank starting in May 2005, he decided the monetary responses to the worldwide crisis of 2008-09 and its aftershocks. Fischer?s unpublished Robbins Lectures, delivered at the LSE late in 2001, drew lessons from his service at the IMF. Did emerging markets follow up on those lessons, and did their preparations help them weather the storm of 2008-09? How have economists? views, and Fischer?s, changed as a result of the global financial crisis? In this paper I propose answers to these questions, focusing on the experiences of three Asian crisis countries, Indonesia, Korea, and Thailand.
Keywords: Asian crisis; capital controls; exchange rate regime; financial crises; foreign exchange intervention; macroprudential regulation; Stanley Fischer; transparency
JEL Codes: E44; E63; F32; F34; F36; F65; G01; G15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shift from informal exchange rate pegs to managed floats (F31) | reduced risk of future crises (H12) |
| reduced risk of future crises (H12) | relative economic stability during the 2008-09 crisis (F65) |
| introduction of inflation targeting (E52) | stabilized inflation expectations (E31) |
| stabilized inflation expectations (E31) | countercyclical monetary policy responses during the global crisis (E63) |
| accumulation of foreign exchange reserves (F31) | mitigate adverse effects of capital outflows during the crisis (F32) |
| high reserves (F31) | reduce crisis vulnerability (H12) |