Criteria that have been used in the literature to identify contagion include:4 (i) the transmission is in excess of what can be explained by economic fundamentals;5 (ii) the transmission is different from regular adjustments observed in tranquil times;6 (iii) the events constituting contagion are negative extremes;7 and (iv) the transmission is sequential, for example in a causal sense.
[5] The CESEE region, and Europe more generally, may be vulnerable to such a shift. Last year, trade as a share of GDP was higher than the euro area average for two-thirds of CESEE economies.