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Did Globalization Kill Contagion?

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  • Oosterlinck, Kim
  • Accominotti, Olivier
  • BRIERE, Marie
  • Burietz, Aurore
  • Szafarz, Ariane
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.

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  • Oosterlinck, Kim & Accominotti, Olivier & BRIERE, Marie & Burietz, Aurore & Szafarz, Ariane, 2020. "Did Globalization Kill Contagion?," CEPR Discussion Papers 14395, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14395
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    More about this item

    Keywords

    Contagion; Globalization; Financial history; stock market; Market interdependence; Economic integration;
    All these keywords.

    JEL classification:

    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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