Arbeitspapier
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 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.
- Language
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Englisch
- Bibliographic citation
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Series: ADB Working Paper Series on Regional Economic Integration ; No. 45
- Classification
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Wirtschaft
Multiple or Simultaneous Equation Models; Multiple Variables: General
Business Fluctuations; Cycles
- Subject
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Potential output
Markov-switching model
structural break
global crisis
East Asia
- Event
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Geistige Schöpfung
- (who)
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Park, Cyn-Young
Majuca, Ruperto
Yap, Josef
- Event
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Veröffentlichung
- (who)
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Asian Development Bank (ADB)
- (where)
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Manila
- (when)
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2010
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Park, Cyn-Young
- Majuca, Ruperto
- Yap, Josef
- Asian Development Bank (ADB)
Time of origin
- 2010
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