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Will Bank Bailouts Bust Budgets? Fiscalisation of the East Asian financial crisis
Author(s) -
Rosengard Jay K.
Publication year - 2004
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/j.1467-8411.2004.00147.x
Subject(s) - bust , financial crisis , limiting , financial system , position (finance) , debt , economics , east asia , fiscal policy , economic policy , business , finance , monetary economics , macroeconomics , political science , boom , mechanical engineering , china , environmental engineering , law , engineering
East Asia has returned to a position of relative financial stability and modest economic growth seven years since the onset of the East Asian financial crisis, but the long‐range impact of the crisis is still unclear, especially regarding fiscal ramifications. Thailand and Indonesia were two of the hardest hit economies and each had exemplary fiscal policies before the crisis. Since the crisis, both countries have maintained prudent fiscal policies, keeping budget deficits relatively small, managing debt burdens effectively and limiting exposure to contingent liabilities. Both countries have addressed the short‐term triggers of the financial crisis admirably and continue to monitor vigilantly their external vulnerabilities. Thus, if either country experiences a fiscal crisis, it will be the result of other factors—bank bail‐outs will bust budgets only if banks have to be bailed out once again due to incomplete or insufficient financial sector reform.