Did Globalization Kill Contagion?
Olivier Accominotti (),
Aurore Burietz (),
Kim Oosterlinck () and
No 14395, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Does financial globalization lead to contagion? We scrutinize linkages between international stock markets in a long historical perspective (1880-2014). Our results highlight that without globalization, contagion cannot exist. However, if cross-market correlations are very high, globalization kills contagion. We show that financial contagion was absent from stock markets in both the period of deglobalization of 1918-1971 and the era of "extreme" globalization of 1972-2014 but was present in the period of "moderate" globalization of 1880-1914. Our results suggest that contagion could become a significant problem if financial markets return to a more moderate level of globalization.
Keywords: contagion; economic integration; Financial history; Globalization; market interdependence; Stock market (search for similar items in EconPapers)
JEL-codes: E44 F36 F65 G15 N20 (search for similar items in EconPapers)
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Working Paper: Did Globalization Kill Contagion? (2020)
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