The 2008 financial crisis and potential output in Asia: Impact and policy implications

Monitoring the behavior of potential output helps policymakers implement appropriate policies in response to an economic crisis. In the short-run, estimates of the output gap can guide the timing of the implementation and withdrawal of stimulus measures. In the medium- to long-term, these estimates...

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Main Authors: Park, Cyn-Young, Majuca, Ruperto P., Yap, Josef T.
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Published: Animo Repository 2011
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Online Access:https://animorepository.dlsu.edu.ph/faculty_research/7979
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Institution: De La Salle University
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spelling oai:animorepository.dlsu.edu.ph:faculty_research-87462023-01-09T23:42:25Z The 2008 financial crisis and potential output in Asia: Impact and policy implications Park, Cyn-Young Majuca, Ruperto P. Yap, Josef T. Monitoring the behavior of potential output helps policymakers implement appropriate policies in response to an economic crisis. In the short-run, estimates of the output gap can guide the timing of the implementation and withdrawal of stimulus measures. In the medium- to long-term, these estimates can also provide the basis for gauging productive potential and, hence, guide policies to support sustainable, non-inflationary output growth. In this paper, we investigate the post-crisis behavior of potential output in emerging East Asian economies by employing the Markov-switching model to account for structural breaks. Results show that after the 1997/98 Asian financial crisis, potential output in Hong Kong, China; the Republic of Korea (Korea); Singapore; and Malaysia reverted to levels consistent with trends prior to the crisis. While there were permanent drops in potential output for both Thailand and Indonesia, growth rates returned to pre-crisis trends. The People’s Republic of China (PRC); Taipei,China; and the Philippines are special cases as explained in the report. Econometric estimates of a simple growth model show that the differences among the patterns of post-crisis recovery can be attributed to the investment-to-gross-domestic-product (GDP) ratio; macroeconomic policies; exchange rate behavior; and productivity, which is proxied by the level of technological activity. These results can be used to guide policy in the aftermath of the 2008 global financial crisis. 2011-08-01T07:00:00Z text https://animorepository.dlsu.edu.ph/faculty_research/7979 Faculty Research Work Animo Repository Asia—Economic conditions Financial crises—Asia Global Financial Crisis, 2008-2009 Economic development—Asia Economics
institution De La Salle University
building De La Salle University Library
continent Asia
country Philippines
Philippines
content_provider De La Salle University Library
collection DLSU Institutional Repository
topic Asia—Economic conditions
Financial crises—Asia
Global Financial Crisis, 2008-2009
Economic development—Asia
Economics
spellingShingle Asia—Economic conditions
Financial crises—Asia
Global Financial Crisis, 2008-2009
Economic development—Asia
Economics
Park, Cyn-Young
Majuca, Ruperto P.
Yap, Josef T.
The 2008 financial crisis and potential output in Asia: Impact and policy implications
description Monitoring the behavior of potential output helps policymakers implement appropriate policies in response to an economic crisis. In the short-run, estimates of the output gap can guide the timing of the implementation and withdrawal of stimulus measures. In the medium- to long-term, these estimates can also provide the basis for gauging productive potential and, hence, guide policies to support sustainable, non-inflationary output growth. In this paper, we investigate the post-crisis behavior of potential output in emerging East Asian economies by employing the Markov-switching model to account for structural breaks. Results show that after the 1997/98 Asian financial crisis, potential output in Hong Kong, China; the Republic of Korea (Korea); Singapore; and Malaysia reverted to levels consistent with trends prior to the crisis. While there were permanent drops in potential output for both Thailand and Indonesia, growth rates returned to pre-crisis trends. The People’s Republic of China (PRC); Taipei,China; and the Philippines are special cases as explained in the report. Econometric estimates of a simple growth model show that the differences among the patterns of post-crisis recovery can be attributed to the investment-to-gross-domestic-product (GDP) ratio; macroeconomic policies; exchange rate behavior; and productivity, which is proxied by the level of technological activity. These results can be used to guide policy in the aftermath of the 2008 global financial crisis.
format text
author Park, Cyn-Young
Majuca, Ruperto P.
Yap, Josef T.
author_facet Park, Cyn-Young
Majuca, Ruperto P.
Yap, Josef T.
author_sort Park, Cyn-Young
title The 2008 financial crisis and potential output in Asia: Impact and policy implications
title_short The 2008 financial crisis and potential output in Asia: Impact and policy implications
title_full The 2008 financial crisis and potential output in Asia: Impact and policy implications
title_fullStr The 2008 financial crisis and potential output in Asia: Impact and policy implications
title_full_unstemmed The 2008 financial crisis and potential output in Asia: Impact and policy implications
title_sort 2008 financial crisis and potential output in asia: impact and policy implications
publisher Animo Repository
publishDate 2011
url https://animorepository.dlsu.edu.ph/faculty_research/7979
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