The Unholy Trinity of Financial Contagion / Graciela L. Kaminsky, Carmen Reinhart, Carlos A. Vegh.

Format:

Book

Author/Creator:

Kaminsky, Graciela L.

Contributor:

National Bureau of Economic Research.

Reinhart, Carmen.

Vegh, Carlos A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10061.

NBER working paper series no. w10061

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Over the last 20 years, some financial events, such as devaluations or defaults, have triggered an immediate adverse chain reaction in other countries -- which we call fast and furious contagion. Yet, on other occasions, similar events have failed to trigger any immediate international reaction. We argue that fast and furious contagion episodes are characterized by "the unholy trinity": (i) they follow a large surge in capital flows; (ii) they come as a surprise; and (iii) they involve a leveraged common creditor. In contrast, when similar events have elicited little international reaction, they were widely anticipated and took place at a time when capital flows had already subsided.

Notes:

Print version record

November 2003.