In this paper, we examine the potential causes of the East Asian crisis, and identify the primary cause of the crisis to be a fundamental reassessment of the profitability of investment in the region. A number of secondary shocks are also identified, including interest risk premia, monetary expansion and output declines brought by financial market failure. We use a forward looking modeling framework to capture some of the major interactions between asset markets, output and trade, and find that it is able to capture the main features of the crisis. Policy responses are examined, and temporary fiscal expansion is found to be generally preferable to monetary expansion or to permanent fiscal expansion.
[On the possibility of ongoing secret negotiations between the U.S. and North Korea] I am always wondering if my chain is being yanked. It could also mean Kim is trying to undermine Moon, who positions himself as a broker between the U.S. and North Korea. These two potential explanations are not mutually exclusive.