Investigating Financial Contagion Links in the U.S. and Eurozone Financial Crises upon Non-High Income Countries

In this paper we are investigating the relationship between high income countries on the one hand and middle and low income countries on the other hand. The paper analyses the effect of financial contagion of the U.S financial crisis of 2008, and later by the Eurozone crisis on non-high income countries. The paper utilizes social network analysis combined with regression analysis. Several hypotheses will be tested: most notably, (1) financial markets (countries with developed financial markets have been affected worse than those who do not have developed markets), (2) trade links (export dependent countries affected more than those with little export), (3) international aid and remittances (countries dependent on aid were hit harder, if aid-flow decreased to these countries). . This paper is part of a larger project on the effect of the economic crises (U.S. and EU) on child poverty in middle and low income countries, and therefore, special attention will be given to this matter (inequality, poverty, etc.).