Recovery or Recession? Post-Devaluation Output Performance : The Thai Experience

Most analyses of the East Asian financial crisis have focused on its causes and the links between currency and banking crises. However a related question is what happens in the aftermath of a crisis? What factors determine the path of an economy in the post-devaluation phase? Does it swiftly bounce back, with the crisis being followed by a period of economic recovery, or does it face a lengthy period of economic recession? An important element in answering these questions is to consider the response to devaluation, since this constitutes an almost invariant component of economic stabilisation. This paper examines these questions using Thailand as a case study