Capital Flows and Financial Crises: A Comparative Analysis of East Asia (1997-98) and Argentina (2001-02)

Complutense University of Madrid Economics Working Paper No. 2004-017

29 Pages Posted: 3 Nov 2004

See all articles by Pablo Bustelo

Pablo Bustelo

Complutense University of Madrid

Date Written: October 2004

Abstract

This paper suggests, first, that a simple theoretical framework is useful in explaining financial crises in emerging economies. Second, it reviews the East Asian financial crises of 1997-98. Third, the paper examines the origins of Argentina's crisis of 2001-02. Fourth, it presents a comparative analysis of both crises, highlighting their similarities and differences. Finally, the conclusions point out the drawbacks of both hard and soft pegs respective to a single foreign currency as well as the need for emerging economies to use capital controls in order to avoid the recurrence of financial crises.

Keywords: East Asia, Argentina, financial crisis, emerging economies, exchange rate, financial markets

JEL Classification: F31, F32, F34, F43

Suggested Citation

Bustelo Gómez, Pablo, Capital Flows and Financial Crises: A Comparative Analysis of East Asia (1997-98) and Argentina (2001-02) (October 2004). Complutense University of Madrid Economics Working Paper No. 2004-017, Available at SSRN: https://ssrn.com/abstract=612784 or http://dx.doi.org/10.2139/ssrn.612784

Pablo Bustelo Gómez (Contact Author)

Complutense University of Madrid ( email )

Applied Economics 1 Campus de Somosaguas
Madrid 28223
Spain
+23 91 394 2472 (Phone)
+34 91 394 2499 (Fax)

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