Munich Personal RePEc Archive

On crises, contagion, and confusion

Reinhart, Carmen and Kaminsky, Graciela (1998): On crises, contagion, and confusion. Published in: Journal of International Economics , Vol. 51, No. 1 (June 2000): pp. 145-168.

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Abstract

Since the Tequila crisis of 1994-95, the Asian flu of 1997, and the Russian virus of 1998, economists have been busy producing research on the subject of contagion. Yet, few studies have examined empirically through which channels the disturbances are transmitted if there are, indeed, fundamental reasons for the spillovers we observe. We attempt to fill this gap by analyzing how both trade links and the largely ignored financial sector links influence the pattern of fundamentals-based contagion. We examine the role of international bank lending, the potential for cross-market hedging, and bilateral and third-party trade in the propagation of crises.

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