Contagion and Trade: Why Are Currency Crises Regional?

Reuven Glick and Andrew Rose

No 6806, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Currency crises tend to be regional; they affect countries in geographic proximity. This suggests that patterns of international trade are important in understanding how currency crises spread, above and beyond any macroeconomic phenomena. We provide empirical support for this hypothesis. Using data for five different currency crises (in 1971, 1973, 1992, 1994, and 1997) we show that currency crises affect clusters of countries tied together by international trade. By way of contrast, macroeconomic and financial influences are not closely associated with the cross-country incidence of speculative attacks. We also show that trade linkages help explain cross-country correlations in exchange market pressure during crisis episodes, even after controlling for macroeconomic factors.

Date: 1998-11
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (116)

Published as Journal of International Money and Finance, Vol. 18, no. 4 (August 1999): 603-617

Downloads: (external link)
http://www.nber.org/papers/w6806.pdf (application/pdf)

Related works:
Journal Article: Contagion and trade: Why are currency crises regional? (1999)
Working Paper: Contagion and Trade: Why are Currency Crises Regional (1998)
Working Paper: Contagion and trade: why are currency crises regional? (1998)
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:nbr:nberwo:6806

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w6806

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().