LESSONS FROM THE ASIAN FINANCIAL CRISIS, AND THE PROSPECTS FOR ...

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Chapter 2 LESSONS FROM THE ASIAN FINANCIAL CRISIS, AND THE PROSPECTS FOR RESUMING HIGH GROWTH Wing Thye Woo∗ University of California, Davis Abstract Broadly speaking, there were two initial explanations for the unexpected nature of the Asian financial crisis. The first explanation emphasized the common structural problems (soft rot) in the crisis Asian countries, and the second explanation emphasized the primary roles of investor panic and financial contagion. In my view, the crisis was built on national weaknesses that were greatly magnified by a flawed international financial system; the initial policy recommendations from Washington, especially to raise interest rates sharply and to close a large number of financial institutions,

• required action on the international front
• defense against the speculative bubble hypothesis
• whims of the market
• political institutions
• economic policy
• imf
• countries
• financial crisis
• economic growth