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Vanishing Contagion?

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Author Info

  • Paolo Mauro
  • Tatiana Didier
  • Sergio L. Schmukler

Abstract

While a number of emerging market crises were characterized by widespread contagion during the 1990s, more recent crises (notably, in Argentina) have been mostly contained within national borders. This has led some observers to wonder whether contagion might have become a feature of the past, with markets now better discriminating between countries with good and bad fundamentals. This paper argues that a prudent working assumption is that contagion has not vanished permanently. Available data do not seem to point to a disappearance of the main channels that contribute to transmitting crises across countries. Moreover, anticipation of the Argentine crisis by international investors may help explain the recent absence of contagion.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Policy Discussion Papers with number 06/01.

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Length: 24
Date of creation: 01 Jan 2006
Date of revision:
Handle: RePEc:imf:imfpdp:06/01

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Keywords: Emerging markets; contagion; financial contagion; hedge; hedge funds; stock market; bond; currency crises; asian crisis; emerging market bond; financial markets; stock market prices; market bond; crisis economies; crisis country; stock market index; bond spreads; financial crisis; financial integration; bond markets; financial system; stock markets; international financial system; financial stability; pre-crisis; crisis countries; international banks; financial institutions; sovereign bond; sovereign bonds; international financial contagion; crisis in emerging market; crisis episodes; bank closures; financial globalization; international financial statistics; bonds; financial economics; macroeconomic policies; flexible exchange rates; bond returns; competitiveness;

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References

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Citations

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Cited by:
  1. Gaston Gelos, 2011. "International Mutual Funds, Capital Flow Volatility, and Contagion-A Survey," IMF Working Papers 11/92, International Monetary Fund.
  2. Koehler-Geib, Friederike Norma, 2008. "The Effect of Uncertainty on the Occurrence and Spread of Financial Crises," Munich Dissertations in Economics, University of Munich, Department of Economics 8067, University of Munich, Department of Economics.
  3. Prakash Kannan & Fritzi Köhler-Geib, 2009. "The Uncertainty Channel of Contagion," IMF Working Papers 09/219, International Monetary Fund.
  4. Philipp Maier, 2007. "Do We Need the IMF to Resolve a Crisis? Lessons from Past Episodes of Debt Restructuring," Working Papers, Bank of Canada 07-10, Bank of Canada.
  5. Yi-Hsuan Chen & Kehluh Wang & Anthony Tu, 2011. "Default correlation at the sovereign level: evidence from some Latin American markets," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 43(11), pages 1399-1411.

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