The Welfare Costs of the 1997 Asian Crisis

This paper has measured the welfare cost of the 1997 Asian crisis for each country in Asia, by deploying Miyakoshi and Okubo(2003)’s model. The paper finds that the ratios of welfare cost to the initial level of consumption are large for all countries: 32% for Thailand, 53% for Indonesia, 28% for Korea, 12% for Malaysia and 19% for Hong Kong. The welfare costs imply how much people should pay the costs to prevent the outburst of the crisis. Then, people think that the reforms for all countries are the emergent task and in particular, Indonesia has serious defects, compared with other countries.