Measuring Contagion with a Bayesian Time-Varying Coefficient Model /

We propose using a Bayesian time-varying coefficient model estimated with Markov chain-Monte Carlo methods to measure contagion empirically. The proposed measure works in the joint presence of heteroskedasticity and omitted variables and does not require knowledge of the timing of the crisis. It dis...

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Bibliographic Details
Main Author: Rebucci, Alessandro
Other Authors: Ciccarelli, Matteo
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2003.
Series:IMF Working Papers; Working Paper ; No. 2003/171
Online Access:Full text available on IMF
Description
Summary:We propose using a Bayesian time-varying coefficient model estimated with Markov chain-Monte Carlo methods to measure contagion empirically. The proposed measure works in the joint presence of heteroskedasticity and omitted variables and does not require knowledge of the timing of the crisis. It distinguishes contagion not only from interdependence but also from structural breaks and can be used to investigate positive as well as negative contagion. The proposed measure appears to work well using both simulated and actual data.
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Physical Description:1 online resource (32 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Access:Electronic access restricted to authorized BRAC University faculty, staff and students