02077cas a2200265 a 4500 AALejournalIMF009702 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451868418 1018-5941 BD-DhAAL BD-DhAAL Rochon, Celine. High Growth and Low Consumption in East Asia : How to Improve Welfare While Avoiding Financial Failures / Celine Rochon, Andrew Feltenstein, Maral Shamloo. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (33 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper analyzes certain policies that are typical of a number of rapidly growing East Asian countries in which a fixed exchange rate, combined with a surplus labor market, has made domestic assets relatively inexpensive, generating high rates of FDI as well as domestic capital formation. This "investment hunger" can lead to unanticipated declines in the returns to investment, and resulting financial insolvencies. Private consumption remains low and there are concerns that high savings rates cannot be sustained. We construct a dynamic general equilibrium model and apply it to a stylized Asian economy, loosely based upon China. We calibrate a benchmark equilibrium, and carry out various counterfactual simulations to analyze alternative policies, in particular tax cuts and exchange rate revaluations, as instruments in increasing private consumption while avoiding bank failures. Mode of access: Internet Feltenstein, Andrew. Shamloo, Maral. IMF Working Papers; Working Paper ; No. 2007/278 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/278/001.2007.issue-278-en.xml IMF e-Library