Contagion
Contagion is a term used to describe the spread of a financial crisis from one market to another. It is a phenomenon that occurs when a financial shock in one market causes a ripple effect in other markets, leading to a global financial crisis. Contagion can be caused by a variety of factors, including economic downturns, political instability, and natural disasters. It can also be caused by a lack of liquidity in the markets, or by a sudden increase in the cost of borrowing.
History of Contagion
The concept of contagion has been around since the early 19th century, when economists first began to study the effects of financial crises on global markets. In the 1930s, the Great Depression caused a wave of contagion that spread across the world, leading to a global economic downturn. In the 1970s, the oil crisis caused a similar wave of contagion, leading to a global recession. In the 1990s, the Asian financial crisis caused a wave of contagion that spread across the world, leading to a global financial crisis.
In recent years, the global financial crisis of 2008 caused a wave of contagion that spread across the world, leading to a global recession. This crisis was caused by a combination of factors, including a lack of liquidity in the markets, a sudden increase in the cost of borrowing, and a collapse in the housing market.
Comparison Table
| Factor | Great Depression | Oil Crisis | Asian Financial Crisis | Global Financial Crisis |
|---|---|---|---|---|
| Economic Downturn | Yes | Yes | Yes | Yes |
| Political Instability | No | No | Yes | No |
| Natural Disasters | No | No | No | No |
| Lack of Liquidity | No | Yes | Yes | Yes |
| Increase in Cost of Borrowing | No | Yes | Yes | Yes |
Summary
Contagion is a term used to describe the spread of a financial crisis from one market to another. It is a phenomenon that occurs when a financial shock in one market causes a ripple effect in other markets, leading to a global financial crisis. Contagion can be caused by a variety of factors, including economic downturns, political instability, and natural disasters. It can also be caused by a lack of liquidity in the markets, or by a sudden increase in the cost of borrowing. For more information about contagion, please visit the websites of the International Monetary Fund, the World Bank, and the Federal Reserve.
See Also
- Financial Crisis
- Global Recession
- Economic Downturn
- Political Instability
- Natural Disasters
- Lack of Liquidity
- Increase in Cost of Borrowing
- International Monetary Fund
- World Bank
- Federal Reserve
