-
An inital emergency, such as Thailand in 1997, will create a demonstration effect that drives other badly governed countries to the wall.
ECONOMIST: Is contagion a myth?
-
But certain decisions have a telling demonstration effect beyond their actual content.
ECONOMIST: Bagehot
-
Given full information (that is, assuming that the demonstration effect has already kicked in), lenders may be willing to continue financing countries with mildly bad policies provided that business elsewhere is good.
ECONOMIST: Is contagion a myth?
-
He believes the demonstration effect of what an exit looks like vivid television pictures across Europe of a banking panic and an economic collapse would dramatically reduce the likelihood that other countries would risk taking that route.
WSJ: Crisis Won't Hurt Euro Zone��Unless Cyprus Leaves