Did Globalization Kill Contagion?

62 Pages Posted: 10 Mar 2020 Last revised: 30 Apr 2020

See all articles by Olivier Accominotti

Olivier Accominotti

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR)

Marie Briere

Amundi Asset Management; Paris Dauphine University; Université Libre de Bruxelles

Aurore Burietz

affiliation not provided to SSRN

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB

Ariane Szafarz

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi

Multiple version iconThere are 2 versions of this paper

Date Written: February 7, 2020

Abstract

Does financial globalization lead to contagion? We scrutinize linkages between international stock markets in a long historical perspective (1880-2014). Our results highlight that without globalization, contagion cannot exist. However, if cross-market correlations are very high, globalization kills contagion. We show that financial contagion was absent from stock markets in both the period of deglobalization of 1918-1971 and the era of “extreme” globalization of 1972-2014 but was present in the period of “moderate” globalization of 1880-1914. Our results suggest that contagion could become a significant problem if financial markets return to a more moderate level of globalization.

Keywords: contagion, globalization, financial crises

Suggested Citation

Accominotti, Olivier and Briere, Marie and Burietz, Aurore and Oosterlinck, Kim and Szafarz, Ariane, Did Globalization Kill Contagion? (February 7, 2020). Available at SSRN: https://ssrn.com/abstract=3534157 or http://dx.doi.org/10.2139/ssrn.3534157

Olivier Accominotti

London School of Economics & Political Science (LSE) ( email )

Economic History Department
Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Marie Briere (Contact Author)

Amundi Asset Management ( email )

90 Boulevard Pasteur
Paris, 75015
France

Paris Dauphine University ( email )

Université Libre de Bruxelles ( email )

Brussels
Belgium

Aurore Burietz

affiliation not provided to SSRN

Kim Oosterlinck

Université Libre de Bruxelles - SBS-EM, CEB ( email )

50 Avenue Roosevelt, CP114/03
Brussels 1050
Belgium

Ariane Szafarz

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi ( email )

50 Avenue Roosevelt
Brussels 1050
Belgium

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