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Your assignment is to prepare and submit a paper on economics: financial crisis in asia.
Your assignment is to prepare and submit a paper on economics: financial crisis in asia. It is remarkable that the role of economics in the modern world has increased tremendously. In every segment of the economy, finance enjoys a crucial role as it is the back bone of every business and economy. Currency crisis is considered as one of the major problems that the economic sector faces in the modern situation. Attributable to the financial crisis, a country suffers problems of various nature including issues like unemployment, inflation and the like. "Two theories of the causes of currency crises prevail in the economic literature. The first traces currency instability to countries' structural imbalances and weak policies. the second identifies arbitrary shifts in market expectations as the principal source of instability" (Pesenti & Tille 2000).
IMF (International Monetary Fund) is agency that enjoys a wider role in relation to the macro economic policy development. It is an organisation established at international level, which gives great priority to the financial systems and other implementations globally, which is especially dealing with the foreign exchange rates and balance of payments. In addition, IMF also plays a principal role in consideration of economic policies and their impact. "The main function of the I.M.F is to
(d) Finance investment loans to developing countries" (Functions of IMF. 2007). IMF provided a guiding role for recovering the currency disaster being suffered by the Korean Government. More over, it was very keen about the effective functioning of money market globally. The countries though suffered the crisis approach IMF for getting certain loans and assistance. Even though the assistance is being provided by the IMF was good enough to recover the impact of Asian crisis, it is still suffering a lot. More over, IMF is also offering assistance to reduce the crisis faced by NICs (New Industrialising Countries).
The macro economic policy gives the major focus on its monetary and fiscal policies. Fiscal policy is related to the two major concepts of the allocation of resources and the proper distribution of income. The proper implementation of fiscal policy is extremely essential in order to maintain a constant price level, elimination of job redundancy and, thereby, the fulfilment of effective economic growth. Consequently, the fiscal policy has an exceptionally important role in the proper accomplishment of economic objective. For the effective implementation of an economy, the fiscal policy stresses on certain major concepts like effectiveness and efficiency, in order that the policy is stable and goal-attainable in nature. Monetary policy is one of the great tools and a major technique adopted by the Government in order to improve the economic growth. This policy emphasizes the two concepts of the rate prevailing for the borrowal and the supply of money, which are based on the accepting of deposits and lending of money. But the inflation force and monetary policy is related in respect of economic development.
Asian economy can be best termed a developing economy and still faces various economic issues.
