Equity market-related economic uncertainty and the “economic contagion phenomenon”

Rexford Abaidoo and Ayodele Alade

Journal of Financial Economic Policy, 2020, vol. 13, issue 3, 337-352

Abstract: Purpose - This study examines potential causal interactions between a dominant economy and its trading partners, with the view of verifying surmised economic contagion effects traditionally presumed to emanate from dominant economies toward trading partners. Design/methodology/approach - The study used the Toda–Yamamoto Wald test approach to bi-variate causality analysis. Findings - This study verified the existence of the economic contagion phenomenon; Estimated empirical evidence failed to fully support the presumption that such contagion effects mostly emanates from dominant economies toward trading partners, all things being equal. For instance, although this study found significant economic contagion effects emanating from the US economy toward the Chinese economy, the authors also detected six different uni-directional causal interactions with the direction of causality emanating from trading partners toward the US economy. Originality/value - The uniqueness of this study stems not from its verification of the economic contagion phenomenon using equity market-related economic uncertainty as the potential contagion. This study fills a gap in the present literature by focusing on the happenings in the equity market as the potential candidate of the economic contagion phenomenon between a dominant economy and its key trading partners.

Keywords: Economic contagion; Equity market-related economic uncertainty; Financial markets; Macroeconomic uncertainty; GDP growth; Economic policy uncertainty; Financial markets and institutions; Financial aspects of economic integration; F11; F15; F41; F62; C12 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jfeppp:jfep-10-2019-0214

DOI: 10.1108/JFEP-10-2019-0214

Access Statistics for this article

Journal of Financial Economic Policy is currently edited by Prof Franklin Mixon

More articles in Journal of Financial Economic Policy from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().