Reinhart, Carmen and Kaminsky, Graciela and Vegh, Carlos (2002): Two Hundred Years of Contagion. Published in: Journal of Economic Perspectives , Vol. 17, No. 4 (2003)
Download (89Kb) | Preview
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
|Item Type:||MPRA Paper|
|Original Title:||Two Hundred Years of Contagion|
|English Title:||Two Hundred Years of Contagion|
|Keywords:||financial contagion crisis history trade banks lending|
|Subjects:||F - International Economics > F3 - International Finance > F32 - Current Account Adjustment; Short-Term Capital Movements
N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||Carmen Reinhart|
|Date Deposited:||07. Feb 2009 05:35|
|Last Modified:||12. Feb 2013 10:40|
Baig, Taimur and Ilan Goldfajn. 1998. “Financial market contagion in the Asian crises”. IMF Working Paper 98/155.
Bordo, Michael and Barry Eichengreen. 1999. “Is Our Current International Economic Environment Unusually Crisis Prone?” Mimeograph.
Bordo, Michael and Antu P. Murshid. 2000. “The International Transmission of Financial Crises before World War II: Was there Contagion,” Mimeograph.
Caramazza, Franceso, Luca Ricci, and Ranil Salgado. 2000. “Trade and Financial Contagion in Currency Crises.” IMF Working Paper WP/00/55.
Calvo, Guillermo. 1998. “Capital Market Contagion and Recession: An Explanation of the Russian Virus.” Mimeograph.
Calvo, Guillermo and Enrique Mendoza. 2000. “Rational Contagion and the Globalization of Securities Markets.” Journal of International Economics. June 51:1, pp. 79-113.
Calvo, Guillermo and Carmen Reinhart. 2000. “When Capital Inflows Come to a Sudden Stop: Consequences and Policy Options” in Reforming the International Monetary and Financial System, P. Kenen and A. Swoboda, eds. Washington DC: International Monetary Fund, pp. 175-201.
Calvo, Sara and Carmen Reinhart. 1996. “Is There Evidence of Contagion Effects?” in Private Capital Flows to Emerging Markets After the Mexican Crisis, G. Calvo, M. Goldstein, E. Hochreiter, eds., Washington, DC: Institute for International Economics, pp. 151-171.
Dawson, Frank G. 1990. The First Latin American Debt Crisis. New Haven and Londong: Yale University Press.
De Gregorio, Jose, Sebastian Edwards, and Rodrigo O. Valdes. 2000. “Controls on Capital Flows: Do they Work?.” NBER Working Paper No. 7645.
Eichengreen, Barry, Andrew Rose, and Charles Wyplosz. 1996. “Contagious Currency Crises: First Tests.” Scandinavian Journal of Economics. 98, pp. 463-484.
Forbes, Kristin, and Roberto Rigobon. 2002. “No Contagion, Only Interdependence,” Journal of Finance, forthcoming.
Frankel, Jeffrey and Sergio Schmukler. 1998. “Crises, Contagion and Country Funds: Effects on East Asia and Latin America,” in Managing Capital Flows and Exchange Rates: Perspectives from the Pacific Basin. Reuven Glick, ed. New York: Cambridge University Press, pp. 232-266 Gerlach, S. and Frank Smets. 1996. “Contagious Speculative Attacks.” CEPR Discussion Paper No. 1055.
Glick, Reuven and Andrew Rose. 1999. “Contagion and Trade: Why Are Currency Crises Regional.” Journal of International Money and Finance. August, 18:4, pp. 603-617.
Goldstein, Morris. 1998. The Asian Financial Crisis. Washington, DC: Institute for International Economics.
International Monetary Fund, Capital Markets Report. Various issues.
International Monetary Fund, World Economic Outlook. Various issues.
Kaminsky, Graciela and Carmen Reinhart. 2000. “On Crises, Contagion, and Confusion.” Journal of International Economics. June, 51:1, pp. 145-168.
Kaminsky, Graciela and Carmen Reinhart. 2002. “Financial Markets in Times of Stress.” Journal of Development Economics. October, 69:1, pp.
Kaminsky, Graciela and Sergio Schmukler. 1999. “What Triggers Market Jitters? A Chronicle of the Asian Crisis.” Journal of International Money and Finance. August,18:4, pp. 537-560.
Kaminsky, Graciela, Richard Lyons, and Sergio Schmukler. 2000. “Managers, Investors, and Crises: Mutual Fund Strategies in Emerging Markets.” NBER Working Paper No. 7855.
Kindleberger, Charles P., 2000, Manias, Panics, and Crashes. John Wiley & Sons, 4th edition.
Lahiri, Amartya, and Carlos A. Végh, “Delaying the Inevitable: Optimal Interest Rate Defense and BOP Crises,” Journal of Political Economy (2003), forthcoming.
Marichal, Carlos. 1989. A Century of Debt Crises in Latin America. New Jersey: Princeton University Press.
Mody, Ashok and Mark Taylor. 2002. “Common Vulnerabilities.” Mimeograph.
Neal, Larry and Marc Weidenmeir. 2002. “Crises in the Global Economy from Tulips to Today: Contagion and Consequences.” National Bureau of Economic Research Working Paper 9147. September.
Morsy, Hanan. 2002. “Financial Crisis Contagion in the Interwar Period.” Mimeograph; George Washington University.
Neal, Larry. 1998. “The Financial Crisis of 1825 and the Restructuring of the British Financial System.” The Federal Reserve Bank of St. Louis Review, Vol. 80, May/Jue, pp. 53-76.
Pastor, Gonzalo, and Tatiana Damjanovic. 2001. “The Russian Financial Crisis and its Consequences for Central Asia.” IMF Working Paper WP/01/169.
Talvi, Ernesto and Carlos A. Végh, 2000. "Tax Base Variability and Procyclical Fiscal Policy." NBER Working Paper No. 7499.
Van Rijckeghem, Caroline and Beatrice Weder. 2000. “Financial contagion: Spillovers through Banking Centers.” Mimeograph.