Indonesia’s Economic Crisis: Contagion and Fundamentals
نویسنده
چکیده
The severe and unanticipated economic downturn in Indonesia mirrored the regional economic fallout following the 1997 financial crisis. Although it seems likely that the crisis in neighboring countries had an adverse impact on Indonesia, the issue has so far received little attention. This paper examines economic contagion from Thailand to Indonesia. It finds evidence of such contagion, which was possibly exacerbated by increasing imbalances in the Indonesian economy. The paper also examines which channels that might have transmitted the economic difficulties from Thailand to Indonesia. Investors’ behavior, rather than real links, is identified as one important channel for the contagion.
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