Spatial Contagion of Global Financial Crisis

Ari Tjahjawandita (), Tito Pradono () and Rullan Rinaldi ()

No 200906, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: The global financial crisis triggered by the credit crisis in the USA as its epicenter,quickly spread across the globe. The crisis starts spreading around the world in the middle of 2007 and along the 2008, where stock markets in major economies fell, followed by collapses of large companies and leading financial institutions. In a world where economies are integrated, the spread of such crisis is unavoidable. In this paper, we try to estimate the spill over effect of the global financial crises across borders and regions. Using spatial econometrics method we employ distance based weight matrix to estimate the spatial dependence and spatial heterogeneity of the crises. On the sensitivity analysis, we also employ weights matrix that is corrected by the governance and the economic freedom index to shows how the virtual space of governance, economic institution and regimes affect the spread of the crises.

Keywords: Global Financial Crises; Spillover Effect; Institutions; Globalization; Spatial Econometrics (search for similar items in EconPapers)
JEL-codes: C1 G1 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2009-08, Revised 2009-08
New Economics Papers: this item is included in nep-fmk, nep-geo and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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