Legacy of the Asian Currency Crisis: The Case of Korea


This paper reexamines the long run effects of the 1997 Asian crisis on the Korean economy. Using unobserved components models subject to Markov regime-switching, we address two questions:1) whether the output losses of Koreaduring 1997-1998 were permanent or transitory;2) when the trend growth rate decreased. Estimation results suggest that the trend growth rate of the Korean economy has already declined around 1992-1993 prior to the 1997 crisis, and given the transition of the Korean economy into the low-growth regime in the early 90s, the effects of the crisis are mainly transitory.

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J. Kim and G. Lim, "Legacy of the Asian Currency Crisis: The Case of Korea," Modern Economy, Vol. 3 No. 8, 2012, pp. 939-942. doi: 10.4236/me.2012.38118.

Conflicts of Interest

The authors declare no conflicts of interest.


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