Asian currency crisis and the role of Japan

The Asian currency crisis which began in 1997 is analyzed in this paper within a multisectoral world econometric model. Three Asian economies (the Republic of Korea, Indonesia, and Thailand) which accepted the IMF emergency aid program are examined in the context of the East Asia and the world economy. After reviewing the various impacts of the currency crisis on output, trade, and the balance of payments in the Asian and world economies, three Japanese policy packages for recovering from the crisis are proposed and evaluated. These are (a) the promotion pf Japan's domestic demand and imports, (b) the yen's appreciation to stimulate Asian exports, and (c) a dramatic increase in Japan's ODA to the said three Asian countries. The third package is concluded to be the most effective as it directly stimulates not only their exports but also domestic demand.