Abstract This chapter examines the macroeconomic adjustment following the 1997 financial crisis in East Asia from a broad international perspective. It evaluates the impacts of the crisis on gross domestic product growth using a cross-country data set and identifies the critical factors that determine the adjustment process. The analysis reveals GDP growth rates drop with the eruption of a crisis but then recover quickly to the pre-crisis level in two or three years, showing a V-pattern of adjustment. This chapter also investigates the internal and external factors responsible for the deeper crisis and the quicker recovery in East Asia.
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