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Containing Contagious Financial Crises: The Political Economy of Joint Intervention into the Asian Crisis

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Abstract

The notion of contagion has changed the wayscientists perceive financial crises,causing heated debate on the politicaleconomy of crisis intervention. Based on aformal model that shows how a financialcrisis can escalate and spread contagiously,this article analyzes game-theoreticallyhow a financial market crisis can becontained through intervention. The centralfocus is the role that internationalorganizations play in overcoming thecollective action problem of jointintervention. It is argued that the IMFsupport programs were helpful, and probablynecessary in a class of cases we analyzemore carefully, in surpassing the thresholdlevel of collective action.

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Authors and Affiliations

  1. School of Economics, Culture and Social Sciences, University of Stavanger, N-4091, Stavanger, Norway

    Kjell Hausken

  2. Faculty of Public Administration, University of Konstanz, D-78434, Konstanz, Germany

    Thomas Plümper

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  1. Kjell Hausken
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  2. Thomas Plümper
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Hausken, K., Plümper, T. Containing Contagious Financial Crises: The Political Economy of Joint Intervention into the Asian Crisis. Public Choice 111, 209–236 (2002). https://doi.org/10.1023/A:1014943528057

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