TY  - JOUR
AU  - Kaminsky,Graciela L.
AU  - Reinhart,Carmen
AU  - Vegh,Carlos A.
TI  - The Unholy Trinity of Financial Contagion
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10061
PY  - 2003
Y2  - November 2003
UR  - http://www.nber.org/papers/w10061
L1  - http://www.nber.org/papers/w10061.pdf
N1  - Author contact info:
Graciela L. Kaminsky
Department of Economics
George Washington University
Washington, DC  20052
Tel: 202/994-6686
Fax: 202/994-6147
E-Mail: graciela@gwu.edu

Carmen M. Reinhart
University of Maryland
School of Public Policy
and Department of Economics
4105 Van Munching Hall
College Park, MD 20742
Tel: 301/405-7006
Fax: 301/403-8107
E-Mail: creinhar@umd.edu

Carlos A. Vegh
Department of Economics
Tydings Hall, Office 4118G
University of Maryland
College Park, MD 20742-7211
Tel: 301-405-3546
Fax: 301-405-3542
E-Mail: vegh@econ.bsos.umd.edu
M1  - published as Kaminsky, Graciela L., Carmen M. Reinhart and Carlos A. Vegh. "The Unholy Trinity Of Financial Contagion," Journal of Economic Perspectives, 2003, v17(4,Fall), 51-74.
AB  - 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.
ER  -