Abstract

Reviewing the definition and measurement of speculative bubbles in context of contagion, this paper analyses the DotCom bubble in American and European equity markets using the dynamic conditional correlation (DCC) model proposed as on one hand as an econometrics explanation and on the other hand the behavioral finance as an psychological explanation. Contagion is defined in this context as the statistical break in the computed DCCs as measured by the shifts in their means and medians. Even it is astonishing, that the contagion is lower during price bubbles, the main finding indicates the presence of contagion in the different indices among those two continents and prove the presence of structural changes during financial crisis.

Details

Title
Speculative bubbles and contagion: Analysis of volatility’s clusters during the DotCom bubble based on the dynamic conditional correlation model
Author
Kohn, Maximilian-Benedikt Herwarth 1 ; Valls Pereira, Pedro L 2 

 Sao Paulo School of Economics - FGV, Sao Paulo, Brazil 
 Sao Paulo School of Economics - FGV and CEQEF - FGV, Sao Paulo, Brazil 
Publication year
2017
Publication date
Dec 2017
Publisher
Taylor & Francis Ltd.
e-ISSN
23322039
Source type
Scholarly Journal
Language of publication
English
ProQuest document ID
2008014764
Copyright
© 2017 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. This work is licensed under the Creative Commons Attribution License http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.