A note on decoupling, recoupling and speculative bubble: some empirical evidence for Latin America

Abstract

The US subprime mortgage crisis has led to increased interest in the decoupling-recoupling hypothesis, according to which the international comovement of financial markets has strengthened since the US subprime mortgage crisis has gathered steam. We study whether the decoupling-recoupling hypothesis holds for news to speculative bubbles in equity markets. For several Latin American countries, we do not find evidence of a recoupling of speculative bubbles.