IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this book chapter or follow this series

Capital Flows to Latin America: Is There Evidence of Contagion Effects?

In: Private Capital Flows to Emerging Markets After the Mexican Crisis

  • Carmen M. Reinhart

    ()

    (Peterson Institute for International Economics)

  • Sara Calvo

Mexico's economic crisis in December 1994 gave renewed importance to the issue of"spillover"or"contagion"effects in other emerging market economies (and their sensitivity to events in larger countries in the region.) They focus on how small open economies are affected by their neighbors'ecomomic developments and what role financial markets play in the transmission of disturbances. They find that: (1) There was evidence of increased comovement across weekly equity and Brady bond returns for emerging markets in Latin America after the Mexican crisis. Such comovement could be seen as evidence of herding behavior among investors, or as a result of the effect on stock prices in other markets when a few large investors in one market sell off equities to raise cash. (2) Contagion may be more regional than global--the degree of comovement after the crisis increased in both Asia and Latin America, but regional patterns differed. (3) International capital movements are all significantly affected by swings in interest rates in the United States. Other things being equal, increases in U.S. interest rates are associated with capital outflows from Latin America. Large and small countries are equally vulnerable. (4) Developments in large countries influence the capital account balance of all countries in the region through a more persistent form of contagion than that associated with a crisis. Other things being equal, capital flows in and out of large countries in a region tend to encourage flows affecting the smaller countries, although capital developments in small countries appear to have no systematic impact on larger countries. (5) Smaller Latin American countries appear to be affected more by developments in a core set of countries in a region than by developments in a single country.

(This abstract was borrowed from another version of this item.)

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

as
in new window

This chapter was published in:
  • Guillermo A. Calvo & Morris Goldstein & Eduard Hochreiter (ed.), 1996. "Private Capital Flows to Emerging Markets after the Mexican Crisis," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 49.
  • This item is provided by Peterson Institute for International Economics in its series Peterson Institute Press: Chapters with number 49-01.
    Handle: RePEc:iie:piiech:49-01
    Contact details of provider: Postal: 1750 Massachusetts Ave., NW, Washington, DC
    Phone: 202-328-9000
    Fax: 202-328-5432
    Web page: http://bookstore.piie.com/
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Michael P. Dooley, 1988. "Capital Flight: A Response to Differences in Financial Risks," IMF Staff Papers, Palgrave Macmillan, vol. 35(3), pages 422-436, September.
    2. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1994. "The Capital Inflows Problem: Concepts And Issues," Contemporary Economic Policy, Western Economic Association International, vol. 12(3), pages 54-66, 07.
    Full references (including those not matched with items on IDEAS)

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

    When requesting a correction, please mention this item's handle: RePEc:iie:piiech:49-01. 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: (Peterson Institute webmaster)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.