Answer:
A domino effect is present when past occurrences of local, regional or global crashes significantly increase the probability of more severe crashes. We capture interdependence by including variables that represent information from the currency market, the bond market, and short-term interest rates.
Explanation:
A domino effect states that when you make a change to one behavior it will activate a chain reaction and cause a shift in related behaviors as well. For example, whenever you make your bed in the morning, you may do it again the next morning.
contagion effect
in economics and finance, a contagion can be explained as a situation where a shock in a particular economy or region spreads out and affects others by way of, say, price movements. Description: The contagion effect explains the possibility of spread of economic crisis or boom across countries or regions.
