Arbeitspapier
A Wake-Up-Call Theory of Contagion
We propose a novel theory of financial contagion. We study global coordination games of regime change in two regions with an initially uncertain correlation of regional fundamentals. A crisis in region 1 is a wake-up call to investors in region 2 that induces a reassessment of local fundamentals. Contagion after a wake-up call can occur even if investors learn that fundamentals are uncorrelated and common lender effects or balancesheet linkages are absent. Applicable to currency attacks, bank runs and debt crises, our theory of contagion is supported by existing evidence and generates a new testable implication for empirical work.
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Canada Working Paper ; No. 2015-14
- Classification
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Wirtschaft
Asymmetric and Private Information; Mechanism Design
Financial Crises
- Subject
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Exchange rates
Financial stability
International financial markets
- Event
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Geistige Schöpfung
- (who)
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Ahnert, Toni
Bertsch, Christoph
- Event
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Veröffentlichung
- (who)
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Bank of Canada
- (where)
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Ottawa
- (when)
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2015
- DOI
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doi:10.34989/swp-2015-14
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ahnert, Toni
- Bertsch, Christoph
- Bank of Canada
Time of origin
- 2015
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