Contagious Currency Crises
54 Pages Posted: 18 Nov 2001
Date Written: August 1996
This paper is concerned with the fact that the incidence of speculative attacks tend to be temporally correlated; that is, currency crises appear to pass 'contagiously' from one country to another. The paper provides a survey of the theoretical literature, and analyses the contagious nature of currency crises empirically. Using 30 years of panel data from 20 industrialized countries, we find evidence of contagion. Contagion appears to spread more easily to countries that are closely tied by international trade linkages than to countries in similar macroeconomic circumstances.
Keywords: Channels, data, international, macroeconomic, panel, similarity, speculative, trade
JEL Classification: F31
Suggested Citation: Suggested Citation