Asia’s post-global financial crisis adjustment : a model-based dynamic scenario analysis

Using a dynamic global general equilibrium model, the paper assesses theshort- and medium-term impacts of the global financial crisis for Asianeconomies and the implications of post-crisis adjustment in East Asia for theworld economy. The analysis suggests that East Asia may not be severely hitpermanently by the global financial crisis, and that a worldwide fiscalstimulus could play an important role in stabilizing the global economy incrisis. East Asia’s efforts toward strengthening regional and domesticdemand, in conjunction with more flexible exchange rate regimes, willpromote more balanced regional growth, facilitating an orderly globalrebalancing. However, despite the growing size of emerging East Asia in theglobal economy, the region’s growth rebalancing has only modest spillovereffects on the rest of the world. Emerging East Asia can contribute to globalgrowth, but it alone cannot become the sole engine leading post-crisis growthin the world economy. (Asian Dev Rev/GIGA)