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On crises, contagion, and confusion

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  • Reinhart, Carmen
  • Kaminsky, Graciela

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.

Suggested Citation

  • Reinhart, Carmen & Kaminsky, Graciela, 1998. "On crises, contagion, and confusion," MPRA Paper 13709, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13709
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    References listed on IDEAS

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    1. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1996. "Contagious Currency Crises," CEPR Discussion Papers 1453, C.E.P.R. Discussion Papers.
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    More about this item

    Keywords

    trade financial contagion bank lending currency crisis devaluation;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F1 - International Economics - - Trade

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