Whenever one of the developing markets sneezes, the rest of the emerging markets are likely to suffer from anything from the sniffles to pneumonia.
Whenever one of the developing markets sneezes, the rest of the emerging markets are likely to suffer from anything from the sniffles to pneumonia. When the connections among the countries are slim, this phenomenon has come to be known as financial contagion. This Research Foundation monograph provides an introduction to this fascinating subject—definitions of the term, instances of contagion in the 1990s, the theories that attempt to explain it, previous evidence from tests of the theories and problems with the testing procedures, and the results of new tests. Because the new research raises more questions than it answers, the monograph closes with a discussion of where to go from here.