Contagion: Why Crises Spread and How This Can Be Stopped

  • Stijn Claessens
  • Rudiger Dornbusch
  • Yung Chul Park


The financial turbulence that hit many East Asian countries in 1997, and then spread to other parts of the world, continued unabated in the fall of 1998. Russia defaulted on its debt as confidence in global financial markets evaporated. The turmoil next hit developed countries’ capital markets, dramatically altering the (relative) pricing of many financial instruments, which in turn accelerated the collapse of Long-Term Capital Management (LTCM), a large U.S. hedge fund. The turmoil subsequently affected Brazil, where it created large uncertainties about that country’s ability to rollover its public sector debt, thus spilling over into other Latin American emerging markets and elsewhere (see further World Bank, 1999 and International Monetary Fund, 1999).


Asset Price Hedge Fund Capital Flow East Asian Country Crisis Period 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Stijn Claessens
    • 1
  • Rudiger Dornbusch
    • 2
  • Yung Chul Park
    • 3
  1. 1.World BankUSA
  2. 2.Massachusetts Institute of TechnologyUSA
  3. 3.Korea UniversityKorea

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