Research on the Mechanism of the Spatial Contagion of Global Financial Crises: From the Perspective of Pure Contagion

In the post financial crisis era, the contagion of a financial crisis remains an important issue. Drawing upon the idea of absolute physical space in classical cartography, this paper attempts to construct the space of political and economic systems for the contagion of financial crisis through a decomposition and re-synthesis of Index of Economic Freedom. It then utilizes the Spatial Autocorrelation Model to analyze the characteristics of the spatial distribution, structure, and interactions of the contagion. The empirical findings show that the contagion of international financial crisis has dependence on both geographical space and space of economic systems, and the spatial dependence on the latter is more significant and intense than that on the former. These findings verify the pure contagion of a financial crisis, that is, similar political and economic systems rather than geographical proximity among countries are more likely to lead to the contagion of a financial crisis.