Contagion and Trade: Why Are Currency Crises Regional?

Glick, Reuven; Rose, Andrew K.

doi:10.3386/w6806

Cited by 408 publications

(374 citation statements)

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“…They conclude that trade was an important factor. Glick and Rose (1999) conduct a similar analysis with more countries between 1971 and 1997 and obtain a similar result. Forbes (2000) use company's stock market data to study the importance of trade in financial crises transmission and his result also shows that trade played an important role.…”

Section: Literature Review: Trade and Financial Crisesmentioning

confidence: 60%

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The Effects of Financial Crises on International Trade

Cheng

2005

International Trade in East Asia

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Section: Literature Review: Trade and Financial Crisesmentioning

confidence: 60%

“…a crisis in one country causes a new crisis in another country with relatively good fundamentals. Glick and Rose (1999) provide some analysis of the relationship between trade and contagion, while Forbes (2001) goes further to construct some statistics measuring the importance of trade linkages in transmitting crises.…”

Section: Introductionmentioning

confidence: 99%

The Effects of Financial Crises on International Trade

Cheng

2005

International Trade in East Asia

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“…One group argues that the economic fundamentals of different countries are interconnected by their cross-border flows of goods, services, and capital. When a crisis originates in one country, this interdependence of economies through real and financial linkages becomes a carrier of crisis Glick and Rose, 1999;Rijckeghem and 1 For example, Eichengreen et al (1996) define contagion as a significant increase in the probability of a crisis in one country, conditional on a crisis observed in an origin country. Hamao et al (1990) refer to contagion as a volatility spillover from crisis country to other countries.…”

Section: Mechanisms Of Crises Transmissionmentioning

confidence: 99%

Equity Market Contagion During the Global Financial Crisis: Evidence from the World's Eight Largest Economies

Gajurel

Dungey

2013

SSRN Journal

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The global financial crisis (2007)(2008)(2009)) saw sharp declines in stock markets around the world, affecting both advanced and emerging markets. In this paper we test for the existence of equity market contagion originating from the US to advanced and emerging markets during the crisis period. Using a latent factor model, we provide strong evidence of contagion effects originating in US equity markets to equity markets in both the advanced and emerging economies. In the aggregate equity market indices contagion from the US explains a large portion of the variance in stock returns in both advanced and emerging markets. However, evidence from the financial sector indices finds less evidence of contagion than the total indices, and this is particularly the case for the developed markets. This suggests that contagion effects are not strongly related to high levels of global integration.

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“…The case of the IMF stigma in Asia (and Latin America) is a major example of where countries would be extremely reluctant to rely on IMF funding and programs if this was not made palatable by coordination with a regional facility. On the other hand, the regional entity may lack sufficient resources, both in terms of staff and reserves, particularly if more than one country in the region is hit as a result of contagion (Glick and Rose 1998, Eichengreen 2006, Park and Wyplosz 2008. Some scholars, for example, Takagi (2010), argue that regional groupings have greater ability to apply peer pressure to members, but others are skeptical.…”

Section: Reduce Forum Shoppingmentioning

confidence: 99%

Regional and Global Monetary Cooperation

Lamberte¹,

Morgan

2014

Reform of the International Monetary System

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of ADBI, the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan AbstractThe increasing occurrence of national, regional, and global financial crises, together with their rising costs and complexity, have increased calls for greater regional and global monetary cooperation. This is particularly necessary in light of volatile capital flow movements that can quickly transmit crisis developments in individual countries to other countries around the world. Global financial safety nets (GFSNs) are one important area for monetary cooperation. This paper reviews the current situation of regional and global monetary cooperation, focusing on financial safety nets, with a view toward developing recommendations for more effective cooperation, especially between the International Monetary Fund (IMF) and regional financial arrangements (RFAs).A GFSN should have adequate resources to deal with multiple crises, should be capable of rapid and flexible response, and should not be encumbered by historical impediments such as the IMF stigma that would limit its acceptance by recipient countries. Oversight of a GFSN needs to be based on cooperation between global and regional forums, for example, the G20 and ASEAN+3 or East Asia Summit (EAS). Such a GFSN should include the IMF and RFAs at a minimum, and it is highly recommended to find ways to include central banks as providers of swap lines and multilateral banks as well. The basic principles governing the cooperation of IMF and RFAs include rigorous and even-handed sur...

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Contagion and Trade: Why Are Currency Crises Regional?

Cited by 408 publications

References 10 publications

The Effects of Financial Crises on International Trade

The Effects of Financial Crises on International Trade

Equity Market Contagion During the Global Financial Crisis: Evidence from the World's Eight Largest Economies

Regional and Global Monetary Cooperation

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