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Prof. Philippe Bacchetta, SFI@UNIL, research investigates the role of panic in global recessions

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Swiss Finance Institute
Thursday, September 15, 2016 - 08:00

Prof. Philippe Bacchetta, SFI@UNIL, featured recently in the HEC Lausanne Impact magazine. Prof. Bacchetta and his co-author, Eric van Wincoop, investigate the reasons for a financial crisis becoming global. Their research shows that the main factors are not as expected, limitations on credit availability and infection in the financial system. The authors reveal that "negative sentiment can fuel a self-fulfilling chain of events that quickly evolves into a panic driven, full-blown global economic crisis." This implies that there can be strong contagion across countries even with limited economic integration. Read more here. The full copy of the research paper is available on the SFI Research Paper Series here.