A spatial model is used to specify and then test for the existence of contagion among emerging market economies. We consider both trade and regional channels of contagion. Our results suggest that contagion is a statistically significant factor in foreign exchange markets and, furthermore, its effects are not uniform across the countries considered. Our results also suggest that trade links are significant channels of contagion transmission; on the other hand, geographic distances do not appear to be significant channels of contagion transmission.
Spatial Aspects of Contagion Among Emerging EconomiesHarry H. Kelejian, George S. Tavlas, and George Hondroyiannis ,
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Spatial Economic Analysis