TY  - JOUR
AU  - Glick,Reuven
AU  - Rose,Andrew K.
TI  - Contagion and Trade: Why Are Currency Crises Regional?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6806
PY  - 1998
Y2  - November 1998
UR  - http://www.nber.org/papers/w6806
L1  - http://www.nber.org/papers/w6806.pdf
N1  - Author contact info:
Reuven Glick
Economic Research Department
Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA  94105
Tel: 415/974-3184
Fax: 415/974-2168
E-Mail: reuven.Glick@sf.frb.org

Andrew K. Rose
Haas School of Business Administration
University of California, Berkeley
Berkeley, CA 94720-1900
Tel: 510/642-6609
Fax: 510/642-4700
E-Mail: arose@haas.berkeley.edu
AB  - Currency crises tend to be regional; they affect countries in geographic proximity.  This suggests that patterns of international trade are important in understanding how currency crises spread, above and beyond any macroeconomic phenomena.  We provide empirical support for this hypothesis.  Using data for five different currency crises (in 1971, 1973, 1992, 1994, and 1997) we show that currency crises affect clusters of countries tied together by international trade.  By way of contrast, macroeconomic and financial influences are not closely associated with the cross-country incidence of speculative attacks.  We also show that trade linkages help explain cross-country correlations in exchange market pressure during crisis episodes, even after controlling for macroeconomic factors.
ER  -