In 1997/1998 the Indonesian economy was severely hit by the economic crisis, which was then followed by the fall of the New-Order regime. This event brought about political instability and the weakening of a number of macroeconomic indicators. The phenomenon of capital flight began when investors decided to pull some of their valuable assets out of Indonesia and move them to "safer" countries. Provide your analysis on the implications of this crisis to the market for loanable funds, net capital outflow, and the exchange rate in Indonesia.

In 1997/1998 the Indonesian economy was severely hit by the economic crisis, which was then followed by the fall of the New-Order regime. This event brought about political instability and the weakening of a number of macroeconomic indicators. The phenomenon of capital flight began when investors decided to pull some of their valuable assets out of Indonesia and move them to "safer" countries. Provide your analysis on the implications of this crisis to the market for loanable funds, net capital outflow, and the exchange rate in Indonesia.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter27: Investment, The Capital Market, And The Wealth Of Nations

Section: Chapter Questions

Problem 11CQ

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