Vanishing Financial Contagion?

Posted: 19 Mar 2009

See all articles by Tatiana Didier

Tatiana Didier

World Bank

Paolo Mauro

International Monetary Fund (IMF)

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Date Written: September 1, 2007


While a number of crises originated in emerging markets were characterized by widespread contagion in financial markets 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 financial markets now better discriminating between countries with good and bad fundamentals. Available data suggest that the main channels that contribute to transmitting financial crises across countries are-if anything-even stronger today than in the 1990s. Moreover, anticipation by international investors may help to explain the near-absence of contagion in the context of the Argentine crisis. This paper argues that a prudent working assumption is that financial contagion has not vanished.

Keywords: Crises, International Financial Integration, International Transmission of Shocks

JEL Classification: F02, F15, F36

Suggested Citation

Didier, Tatiana and Mauro, Paolo and Schmukler, Sergio, Vanishing Financial Contagion? (September 1, 2007). Journal of Policy Modeling, Vol. 30, No. 5, 2008. Available at SSRN:

Tatiana Didier

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States
(202)458-1525 (Phone)

Paolo Mauro

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Sergio Schmukler (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)


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