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Financial And Economic Crisis - Assignment Example
Author : edwinoberbrunne
Finance & Accounting
Pages 16 (4016 words)
This study aims to discuss and evaluate the theory of financial liberalization and the Washington Consensus and their failure, the causes and effects of the Asian Financial Crisis of 1997; to identify early warning systems and methodologies that identify global imbalances that may be a precursor to crises…
The paper tells that the subprime crisis in the United States resulted to the financial disaster in the stock market in the United States as well around the world as indicated by country and regional stock indices as shown in the charts of this study. The resulting stock index in the markets throughout the globe is proof that the U.S. financial crisis had a tremendous impact on the global economy. In addition, the impact of the U.S. financial crisis caused the GDPs and other macro-economic indicators around the world to decrease indicating that these countries were affected heavily due to globalization. In the developing countries such as South Asia, the global crisis hit these poor countries strong as they had barely recovered the shocks of trade problems that resulted from worldwide food and energy price increases. Their current accounts and fiscal balances worsened sharply and inflation surged to unprecedented levels. Furthermore, their dependence on foreign funding has been relatively large. The global crisis worsened their macroeconomic difficulties as sources of funding declined. The global economic slowdown due to the financial crisis would make them further vulnerable in terms of their export earnings, tourism receipts, remittances and external financing for infrastructure. The reform agenda of the “Washington Consensus” and multilateral institutions has results which were not satisfactory. As such, there is a need to evaluate countries or institution in terms of its nature and geography and that there is a need to uniquely determine their institutional structure. ...
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