Date of Award

Spring 6-4-2026

Document Type

Thesis (Undergraduate)

Department

Economics

First Advisor

Bruce Sacerdote

Second Advisor

Apoorv Gupta

Third Advisor

Douglas Irwin

Abstract

Contagion in Latin America is real but selective: the direction of spillover depends on whether a country is integrated more strongly into global or regional markets. Using a stacked event study across 90 manually identified shocks from 2001 to 2026, I estimate regional contagion and its determinants across credit, currency, equity, and derivative markets. Contagion travels through sovereign credit, not currency, and through economic, not political, shocks. Political shocks, despite their larger domestic impact, stay locally contained. The direction of spillover turns on shock origin: shocks from large, globally integrated economies depress their peers, while shocks from smaller, regionally focused ones send capital rotating toward the larger markets, which gain. The traits that make a country a powerful transmitter differ from those that make it a vulnerable receiver. The strongest transmitters sit at the highly integrated, well-rated, and financially open end of the structural spectrum, while countries with stronger intra-regional trade links and deeper, more liquid markets tend to dampen or even reverse spillovers. By documenting these opposing regional responses to peer shocks, this paper provides evidence that Latin American markets are not a single correlated asset class.

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