Advanced Search
MyIDEAS: Login to save this article or follow this journal

Informational Contagion of Sudden Stops in a Global Games Framework

Contents:

Author Info

  • Victor E. Vaugirard

    ()

Registered author(s):

    Abstract

    This paper highlights the cross-country spread of self-fulfilling financial crises through an informational channel. It sets up a two-country framework of investment with strategic complementarities and incomplete information about economic fundamentals. Each market may be subject to sudden stops, triggered by agents preemptively withdrawing their investments for fear others do so. After observing a massive capital outflow from one country, agents downgrade common fundamentals, and therefore have higher requirements regarding factors specific to the other country. This in turn may induce a crisis in the latter, which is not justified by idiosyncratic events or economic interdependence.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://journals.kluweronline.com/issn/0923-7992/contents
    Download Restriction: no

    Bibliographic Info

    Article provided by Springer in its journal Open Economies Review.

    Volume (Year): 15 (2004)
    Issue (Month): 2 (04)
    Pages: 169-192

    as in new window
    Handle: RePEc:kap:openec:v:15:y:2004:i:2:p:169-192

    Contact details of provider:
    Web page: http://www.springerlink.com/link.asp?id=100323

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Victor Vaugirard, 2004. "Bank runs, political distortions and contagion," Economics Bulletin, AccessEcon, vol. 6(18), pages 1-10.
    2. Tai-kuang Ho & Ming-yen Wu, 2012. "Third-person Effect and Financial Contagion in the Context of a Global Game," Open Economies Review, Springer, vol. 23(5), pages 823-846, November.
    3. Moheeput, Ashwin, 2008. "Financial Fragility, Systemic Risks and Informational Spillovers : Modelling Banking Contagion as State-Contingent Change in Cross-Bank Correlation," The Warwick Economics Research Paper Series (TWERPS) 853, University of Warwick, Department of Economics.
    4. Manz, Michael, 2010. "Information-based contagion and the implications for financial fragility," European Economic Review, Elsevier, vol. 54(7), pages 900-910, October.
    5. Victor Vaugirard, 2005. "Crony Capitalism and Sovereign Default," Open Economies Review, Springer, vol. 16(1), pages 77-99, January.
    6. repec:ebl:ecbull:v:6:y:2004:i:18:p:1-10 is not listed on IDEAS
    7. Vaugirard, Victor, 2007. "Informational contagion of bank runs in a third-generation crisis model," Journal of International Money and Finance, Elsevier, vol. 26(3), pages 403-429, April.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:kap:openec:v:15:y:2004:i:2:p:169-192. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.