TY - JOUR
T1 - The real effects of financial integration
AU - Imbs, Jean
N1 - Funding Information:
Prepared for the IMF Fourth Annual Research Conference, November 2003. This paper was written while the author was visiting the International Economics Section at Princeton University, whose hospitality is gratefully acknowledged. Thanks are due to Marcel Fratzscher, Phil Lane, Alan Taylor, Mark Wright, two anonymous referees, Linda Tesar–the editor–and seminar participants at the University of Houston and the ECB Workshop on the External Dimension of the Euro, Frankfurt, March 2004. Financial support from the National Center of Competence in Research “Financial Valuation and Risk Management” is gratefully acknowledged. The National Centers of Competence in Research (NCCR) are a research instrument of the Swiss National Science Foundation. All errors are mine.
PY - 2006/3
Y1 - 2006/3
N2 - This paper shows how correlations in GDP fluctuations rise with financial integration. Finance serves to increase international correlations in both consumption and GDP fluctuations, which explains the persistent gap between the two in the data, a "quantity puzzle". The positive association between financial integration and GDP correlation constitutes a puzzle, as theory suggests a negative relation if anything. Nevertheless, it prevails in the data even after the effects of finance on trade and specialization are accounted for.
AB - This paper shows how correlations in GDP fluctuations rise with financial integration. Finance serves to increase international correlations in both consumption and GDP fluctuations, which explains the persistent gap between the two in the data, a "quantity puzzle". The positive association between financial integration and GDP correlation constitutes a puzzle, as theory suggests a negative relation if anything. Nevertheless, it prevails in the data even after the effects of finance on trade and specialization are accounted for.
KW - Financial integration
KW - International business cycles
KW - Quantity puzzle
KW - Risk sharing
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U2 - 10.1016/j.jinteco.2005.05.003
DO - 10.1016/j.jinteco.2005.05.003
M3 - Article
AN - SCOPUS:33644654782
SN - 0022-1996
VL - 68
SP - 296
EP - 324
JO - Journal of International Economics
JF - Journal of International Economics
IS - 2
ER -