Did Globalization Kill Contagion?

60 Pages Posted: 11 Feb 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

Catholic University of Lille - IESEG School of Management

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 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, economic integration, Financial history, Globalization, market interdependence, Stock market

JEL Classification: E44, F36, F65, G15, N20

Suggested Citation

Accominotti, Olivier and Briere, Marie and Burietz, Aurore and Oosterlinck, Kim and Szafarz, Ariane, Did Globalization Kill Contagion? (February 2020). CEPR Discussion Paper No. DP14395. Available at SSRN: https://ssrn.com/abstract=3535481

Olivier Accominotti (Contact Author)

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

Amundi Asset Management ( email )

90 Boulevard Pasteur
Paris, 75015
France

Paris Dauphine University ( email )

Université Libre de Bruxelles ( email )

Brussels
Belgium

Aurore Burietz

Catholic University of Lille - IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

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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