Working Paper: NBER ID: w14249
Authors: Graciela L. Kaminsky
Abstract: The crises in Mexico, Thailand, and Russia in the 1990s spread quite rapidly to countries as far apart as South Africa and Pakistan. In the aftermath of these crises, many emerging economies lost access to international capital markets. Using data on international primary issuance, this paper studies the determinants of contagion and sudden stops following those crises. The results indicate that contagion and sudden stops tend to occur in economies with financial fragility and current account problems. They also show that high integration in international capital markets exposes countries to sudden stops even in the absence of domestic vulnerabilities.
Keywords: financial crises; contagion; sudden stops; emerging markets; international capital markets
JEL Codes: F30; F36
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial fragility and current account deficits (F32) | sudden stops in capital flows (F32) |
| high integration in international capital markets (F30) | exacerbation of effects of crises (H12) |
| world market conditions (increases in world real interest rate) (E43) | substantial declines in syndicated loan issuance (G33) |
| regional crises (F51) | contagion effects in global capital market behavior (F65) |
| domestic vulnerabilities, external imbalances, and banking problems (F65) | extent and severity of capital flow reversals (F32) |