A Study On The Contagion Mechanism Of U.S Financial Crisis

In the context of the ongoing economic globalization, financial globalization and world economic imbalance, financial crisis originated in U.S. spreads out all over the world. Not only developed countries bundled with U.S. had got a fever, but also some economies in transition and new emerging market countries which keeping U.S at a distance could not avoid financial crisis contagion. So it has been brought into focus by academia, the media and authorities.At the beginning this dissertation presents an investigation of existing literature of financial crisis contagion, based on which the author argues that different pattern of economy development leading to fundamental frailty and imbalance of macroeconomic structure is the central cause of financial contagion. Subsequently, the role of trade linkage and financial linkage during U.S. financial contagion all over the world is analyzed.In concrete, the main content is organized as follows:In the second chapter, the author provides a survey of divergent financial contagion theory and summarizes the cause, condition and main channel of contagion. From the aspect of contagion channel, the contagion theories are classified into three categories:trade linkage, financial linkage and others.In the third chapter, from the perspectives of imbalance of American economic structure and world economic imbalance, the author presents some conclusions of the origin of American financial crisis, and how and why the financial crisis spreads out so quickly and broadly. All the ideas how American financial crisis originates and spreads have been collected and sorted. Combining the background of current international economic order and the history of international financial system as well as its current structure, the author states that the world economic imbalance and imbalance in the development of individual country lead to breakout and conatgion of financial crisis.Based on the summary of financial contagion theories, chapter four analyses how the financial crisis transmits to Western European countries, Middle and Eastern European countries, Asian countries and Latin American countries in different ways and holds the following views:different patterns of economic development induce imbalance of economic structure and create condition of financial crisis contagion; Different linkages with U.S. determine financial contagion spreads in different channels in different period; Balance Sheet is the main channel of American financial crisis spreading into Western European countries, while the common creditor plays a significant role in transmitting contagion to Eastern European countries; Trade linkage works more than financial linkage during contagion to Asian countries and Latin American countries.Chapter five presents some positive analysis in VAR on contagion with seventy different stock market indexes in order to make all the empirical analysis above more sound.In chapter six, the author summarizes and evaluates the coping strategies adopted by individual country, including industry policy, fiscal policy, monetary policy, trade policy and investment policy. Under the background of analysis of China’s potential safety hazard and some acute problems exposed during the financial crisis, the author states that those policies and strategies can be used as a source of reference while they could bring us stronger shock in the future.The last chapter draws some conclusions and provides precaution measures against international financial contagion to prevent our country from international financial contagion in the future. It is hold that it’s the right time for our country to grasp the opportunity to adjust our economic structure, establish and perfect our corporate governance structure of financial institution, and work together with other countries to solve the inequitable structure in current world economic system.