The Asian Currency Crisis And Bilateral Trade Elasticities
Abstract:
In the summer of 1997 several Southeast Asian
countries, including, Thailand,
Indonesia, Malaysia, Singapore,
South Korea and Taiwan
experienced a rapid depreciation of their currencies.
This dramatically increased the price they paid for
U.S.
goods and decreased the price Americans paid for Asian goods.
The final impact on the trade balance depends on the degree to
which Americans increased their purchases of Asian goods and Asians
decreased their purchases of
U.S.
goods. Therefore this study
will estimate the sensitivity and adjustment path of the U.S. bilateral trade balance to
exchange rate changes. In
particular it will estimate the bilateral trade elasticities between the US and several
Southeast Asian countries in order to provide a better understanding of
our bilateral trade relationship, which will improve policy maker’s
response to future currency crisis.
