Market Contagion: Evidence from the Panics of 1854 and 1857
The American Economic Review, Vol. 90 No. 5
Posted: 15 Apr 2016
Date Written: December 2000
To test a model of contagion — where individuals hear some bad news and communicate it to their acquaintances, who then pass it on, leading to a market panic — requires a knowledge of the information networks of participants, something hitherto unavailable. For two panics in the !850's this paper examines the behavior of Irish depositors in a New York bank. As recent immigrants, their social network was determined largely by their place of origin in Ireland, and where they lived in New York. During both panics this social network turns out to be the prime determinant of behavior.
Keywords: contagion, banking, economic history
JEL Classification: G21, N21
Suggested Citation: Suggested Citation