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Unformatted text preview: t Asian currencies depreciated against the Hong
Kong dollar (US$).
Competitiveness lost. Financial Crisis and Cost Deflation
High level of interest rate caused demand contraction.
Spread between Hong Kong interbank interest rate
and the US treasury bill rate increased, risk premium
Investment was discouraged.
Asset price deflation is on-going.
As wage in labour market was relatively sticky, initial
cost adjustment was accomplished through layoffs,
unemployment rate increased. The Post-Crisis Dilemma and Challenges
Collapse of bubble: shrinkage in real sector could not
sustain the fall of nominal sector. Asset price bubble burst
causes huge capital loss. Exposed structural imbalance.
Fiscal dilemma: more assistance required, coexisted with
China opens up further, Hong Kong loses its comparative
Typical unemployment-inflation trade off.
Searching for other high value-added activities.
International financial centre, innovation and technology,
all require human capital investment.
Importation of talents may also help the development....
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This document was uploaded on 03/26/2014.
- Spring '14