Information Diffusion in International Markets

27 Pages Posted: 25 Apr 2011

See all articles by Alejandro Izquierdo

Alejandro Izquierdo

Inter-American Development Bank (IDB) - Research Department

Jacques Morriset

affiliation not provided to SSRN

Marcelo Olarreaga

University of Geneva; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: July 2003

Abstract

Specific information on trade and financial markets across international borders is costly to acquire. Sellers and buyers rely instead on information obtained from partner behavior in other countries. Three channels are identified through which information is disseminated in import and equity markets of 14 OECD countries. The first consists of information spillovers from commercial to financial markets and vice-versa. We find strong evidence in support of the first direction and some for the reverse, suggesting that traders use common information, frequently from the same sources, such as financial intermediaries. The second and third channels emphasize seller and buyer reputation in third markets. They are equally important in explaining bilateral import flows, but buyer reputation appears to be more relevant for equity flows. All three channels may help better explain contagion effects across markets and countries.

Suggested Citation

Izquierdo, Alejandro and Morriset, Jacques and Olarreaga, Marcelo, Information Diffusion in International Markets (July 2003). IDB Working Paper No. 410. Available at SSRN: https://ssrn.com/abstract=1818699 or http://dx.doi.org/10.2139/ssrn.1818699

Alejandro Izquierdo (Contact Author)

Inter-American Development Bank (IDB) - Research Department ( email )

1300 New York Ave., NW
Washington, DC 20577
United States

Jacques Morriset

affiliation not provided to SSRN

No Address Available

Marcelo Olarreaga

University of Geneva ( email )

40 Boulevard du Pont-d'Arve
Genève, CH - 1205
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
13
Abstract Views
914
PlumX Metrics