Chapter 13
Financial Crises in Emerging Economies
This chapter is for instructors who want to have a more international orientation of their courses.
It extends the analysis in Chapter 12 on financial crises to economies that are just entering the
world marketplace. The analysis is parallel to that in Chapter 12, with Figure 1, which is similar
to Figure 1 in Chapter 12, outlining the dynamics of financial crises in emerging market
economies. Then the chapter takes students through two detailed applications, South Korea in
1997–1998 and Argentina in 2001–2002, to illustrate how useful the analysis in the chapter is.
Once the case discussions are finished, students can use the material at the end of the chapter to
debate differing policies to prevent future emerging market financial crises. They also enjoy the
global box on the Icelandic financial crisis, because it illustrates how advanced economies can
find themselves in similar circumstances to emerging market economies and be subjected to the
enormous costs of financial crises.