Two Hundred Years of Contagion

Carmen Reinhart, Graciela Kaminsky () and Carlos Vegh

MPRA Paper from University Library of Munich, Germany

Abstract: Over the past two hundred years -- some would argue even longer -- financial events, such as the devaluation of a currency or an announcement of default, have been capable of triggering an immediate adverse chain reaction among countries within a region and in some cases across regions. The impact of these shocks on the countries unfortunate enough to be affected usually included sharp declines in equity prices, a spike in the cost of borrowing in international capital markets, and a significant drop in the availability of capital. In more extreme cases, countries have lost access to cross-border capital flows. Significant declines in output have been the norm in these episodes. Yet, it is remarkable that on other occasions similar events have failed to trigger any international reaction, at least on impact. In some instances, financial markets appear to be quite willing to shrug off an event that will obviously have strong trade and real sector repercussions on the crisis country’s neighbors. We explore what leads some crises to be contagious and others not

Keywords: financial; contagion; crisis; history; trade; banks; lending (search for similar items in EconPapers)
JEL-codes: F31 F32 N20 (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: The Unholy Trinity of Financial Contagion (2003)
Working Paper: The Unholy Trinity of Financial Contagion (2003)
Working Paper: The unholy trinity of financial contagion (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13229

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