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Vanishing Contagion?

Author

Listed:
  • 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.

Suggested Citation

  • Paolo Mauro & Tatiana Didier & Sergio L. Schmukler, 2006. "Vanishing Contagion?," IMF Policy Discussion Papers 06/01, International Monetary Fund.
  • Handle: RePEc:imf:imfpdp:06/01
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fritzi Koehler-Geib, 2007. "The Uncertainty Channel of Contagion," Working Papers 034, Bavarian Graduate Program in Economics (BGPE).
    2. Koehler-Geib, Friederike Norma, 2008. "The Effect of Uncertainty on the Occurrence and Spread of Financial Crises," Munich Dissertations in Economics 8067, University of Munich, Department of Economics.
    3. R. G Gelos, 2011. "International Mutual Funds, Capital Flow Volatility, and Contagion – A Survey," IMF Working Papers 11/92, International Monetary Fund.
    4. 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, vol. 43(11), pages 1399-1411.
    5. Philipp Maier, 2007. "Do We Need the IMF to Resolve a Crisis? Lessons from Past Episodes of Debt Restructuring," Staff Working Papers 07-10, Bank of Canada.
    6. Prakash Kannan & Fritzi Köhler-Geib, 2009. "The Uncertainty Channel of Contagion," IMF Working Papers 09/219, International Monetary Fund.

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