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Theory and practice of contagion in monetary unions: Domino effects in EMU Mediterranean countries

Listed author(s):
  • Canofari Paolo
  • Di Bartolomeo Giovanni
  • Piersanti Giovanni

This paper analyzes strategic interactions and contagion effects in the peripheral countries of a monetary union. Using game theory and cost-benefit analysis, the paper determines the set of equilibrium solutions under which country-specific shocks are transmitted to other member countries giving rise to contagion. Numerical simulations, obtained by a simple calibration of the model on some key Mediterranean countries of the Euro Zone, show the probabilities of contagion from Greece, Spain and Italy. Copyright International Atlantic Economic Society 2014

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File URL: http://wp.comunite.it/data/wp_no_109_2014.pdf
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Paper provided by Department of Communication, University of Teramo in its series wp.comunite with number 0109.

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Date of creation: Sep 2014
Handle: RePEc:ter:wpaper:0109
Contact details of provider: Web page: http://wp.comunite.it/

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