The Center and the Periphery: The Globalization of Financial Turmoil

Graciela Laura Kaminsky () and Carmen Reinhart ()

No 9479, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies how financial turbulence in emerging market countries can spread across borders. We construct indices of financial globalization' and evaluate the repercussions of turmoil in three emerging markets, which experienced financial crises in the late 1990s: Brazil, Russia, and Thailand. Our findings indicate that financial turbulence in these countries only spreads globally when they affect asset markets in one or more of the world's financial centers. Otherwise, spillovers are confined to countries in the same region. We also find that fragility in institutions in the financial centers is at the core of global spillovers while economic and monetary policy news contributes to regional spillovers.

JEL-codes: F0 F20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk, nep-ifn and nep-lam
Date: Written 2003-02
Note: IFM
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