Asia Crisis Postmortem: Where Did the Money Go and Did the United States Benefit?

[...]In our view, this apparently surprising immunity of the U.S.economy to the Asia crisis reflects the fact that the original wayof thinking about the crisis was flawed. First, it focused only ondemand-side channels and ignored the supply side. Second, thedepreciation of the Asian currencies against the dollar and therecessions in the crisis countries represented endogenousresponses to a large and sharp reallocation of capital out of theAsia crisis region. From the point of view of the United States,this reallocation of capital is the appropriate starting point—rather than the depreciations and recessions—for consideringthe implications of the crisis.[...]