Crisis Transmission: Evidence from the Debt, Tequila, and Asian Flu Crises

  • José De Gregorio
  • Rodrigo O. Valdés


The increasing globalization of the economy has put the issue of the international transmission of crises in the front line. Although the word contagion is a rather new concept in international finance, it is the focus of a large number of policy-oriented seminars and debates. The clustering of crises by both region and time are at the heart of this discussion. There are several important questions that need to be answered. In this chapter we focus on a subset of them: (i) What are the propagation channels of international crises across countries (other than common shocks)? (ii) Was the debt crisis contagious? And (iii) are there useful policy instruments to shield countries from contagion? In particular, do capital controls, exchange rate flexibility and the external debt-maturity structure affect contagion? We seek to answer these questions using evidence from three key events: the 1982 debt crisis; the 1994 Mexican devaluation; and the 1997 Asian crisis.


Current Account Real Exchange Rate Credit Rating Debt Crisis Current Account Deficit 
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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • José De Gregorio
    • 1
  • Rodrigo O. Valdés
    • 2
  1. 1.Universidad de ChileChile
  2. 2.Banco Central de ChileChile

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