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Did Globalization Kill Contagion?

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  • Olivier ACCOMINOTTI

    (London School of Economics & CEPR)

  • Marie BRIERE

    (AMUNDI & Paris-Dauphine University)

  • Aurore BURIETZ

    (IESEG School of Management & LEM-CNRS 9221)

  • Kim OOSTERLINCK

    (Université Libre de Bruxelles (ULB) & CEPR)

  • Ariane SZAFARZ

    (ULB & New York Univeristy (NYU))

Abstract

Does financial globalization lead to contagion? We scrutinize linkages between international stock markets in a long historical perspective (1880-2014). Our results highlight that without globalization, contagion cannot exist. However, if cross-market correlations are very high, globalization kills contagion. We show that financial contagion was absent from stock markets in both the period of deglobalization of 1918-1971 and the era of “extreme” globalization of 1972- 2014 but was present in the period of “moderate” globalization of 1880-1914. Our results suggest that contagion could become a significant problem if financial markets return to a more moderate level of globalization.

Suggested Citation

  • Olivier ACCOMINOTTI & Marie BRIERE & Aurore BURIETZ & Kim OOSTERLINCK & Ariane SZAFARZ, 2020. "Did Globalization Kill Contagion?," Working Papers 2020-ACF-01, IESEG School of Management.
    • Handle: RePEc:ies:wpaper:f202001
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    More about this item

    Keywords

    contagion; globalization; financial crisis; historical finance;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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