Theory and practice of contagion in monetary unions. Domino effects in EU Mediterranean countries: The case of Greece, Italy and Spain

Paolo Canofari, Giovanni Di Bartolomeo () and Giovanni Piersanti

No 98, CIMEO, Sapienza University of Rome from Department of Economics and Law, Sapienza University of Rome

Abstract: This paper analyzes strategic interactions and contagion effects in countries joined to a monetary union. Using game theory and a cost-benefit analysis, the paper determines the set of equilibrium solutions under which country-specific shocks are transmitted to other member countries giving rise to contagion. Numerical simulations, obtained by a simple calibration of the model on some key Mediterranean countries of the Euro Zone, show the probabilities of contagion from Greece to Spain and Italy.

Keywords: Shadow exchange rate; currency crisis; monetary unions; contagion; Nash equilibria (search for similar items in EconPapers)
Date: 2013-01
New Economics Papers: this item is included in nep-cmp, nep-eec, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.dipecodir.it/wpcom/data/wp_no_98_2013.pdf (application/pdf)

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:ter:wpaper:0098

Access Statistics for this paper

More papers in CIMEO, Sapienza University of Rome from Department of Economics and Law, Sapienza University of Rome
Bibliographic data for series maintained by Giovanni Di Bartolomeo ().