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Large-Scale Synchrony, Global Interdependence and Contagion

Author

Listed:
  • Eric Friedman

    (Rutgers University)

  • Simon Johnson

    (MIT)

  • Adam Landsberg

    (Claremont Colleges)

Abstract

We construct a simple firm-based model of global interdependence. We show how extremely strong statistical correlations can naturally develop between countries even if the interconnections between those countries remain very weak. Potential policy implications of this result are also discussed.

Suggested Citation

  • Eric Friedman & Simon Johnson & Adam Landsberg, 2001. "Large-Scale Synchrony, Global Interdependence and Contagion," Departmental Working Papers 200103, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:200103
    as

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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2001-03.pdf
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    References listed on IDEAS

    as
    1. Roger Lagunoff & Stacey L. Schreft, 1999. "Financial fragility with rational and irrational exuberance," Proceedings, Federal Reserve Bank of Cleveland, pages 531-567.
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    3. Kristin Forbes & Roberto Rigobon, 1999. "No Contagion, Only Interdependence: Measuring Stock Market Co-movements," NBER Working Papers 7267, National Bureau of Economic Research, Inc.
    4. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part I: A Macroeconomic Overview," NBER Working Papers 6833, National Bureau of Economic Research, Inc.
    5. Scheinkman, Jose A & Woodford, Michael, 1994. "Self-Organized Criticality and Economic Fluctuations," American Economic Review, American Economic Association, vol. 84(2), pages 417-421, May.
    6. Franklin Allen & Douglas Gale, 1998. "Financial Contagion Journal of Political Economy," Center for Financial Institutions Working Papers 98-31, Wharton School Center for Financial Institutions, University of Pennsylvania.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    large scale synchrony;

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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