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The Relative Effectiveness of Bailouts and Currency Controls: Financial Crisis Resolution in Malaysia and Indonesia

Mahmood, Muhammad and Grondowski, Gert (2008) The Relative Effectiveness of Bailouts and Currency Controls: Financial Crisis Resolution in Malaysia and Indonesia. Asia Pacific Journal of Economics and Business, 12 (1). pp. 35-44. ISSN 1326-8481

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Abstract

This paper examines the relative effectiveness of bailouts and capital controls in the context of financial crisis experienced by Malaysia and Indonesia in 1997-98. Using a financial pressure index (FPI) similar to that of Kaplan and Rodrik (2001), the paper shows that financial pressure can be effectively and immediately released through capital control measures. Capital controls, therefore, provide the economy with breathing space necessary to implement the required economic policy changes. Overall capital controls can act as circuit breakers in today’s global financial environment, hence they can be considered as effective tools to deal with financial crises.

Item Type: Article
Uncontrolled Keywords: ResPubID16559, financial crisis, financial pressure, financial pressure index, bailouts, capital controls.
Subjects: Faculty/School/Research Centre/Department > School of Economics and Finance
FOR Classification > 1502 Banking, Finance and Investment
SEO Classification > 9001 Financial Services
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Depositing User: VUIR
Date Deposited: 01 Dec 2011 05:33
Last Modified: 22 Dec 2011 03:38
URI: http://vuir.vu.edu.au/id/eprint/3804
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