Finance and Synchronization

Jumana Saleheen, Jean Imbs and Ambrogio Cesa-Bianchi

No 11037, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: It is well known that the bulk of international financial flows across countries are driven by common shocks. In response to these common shocks, we find that capital tends to flow systematically between the same types of countries, while the discrepancy between GDP growth rates widens. Thus, in the data synchronization falls when financial linkages rise, but only so in response to common shocks. In contrast, financial linkages tend to increase the synchronization of business cycles in response to purely country-specific shocks.

Keywords: Business cycle synchronization; Common shocks; Contagion; Financial linkages; Idiosyncratic shocks (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 G21 G28 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-opm
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Finance and synchronization (2019)
Working Paper: Finance and Synchronization (2019)
Working Paper: Finance and Synchronization (2019)
Working Paper: Finance and Synchronization (2016)
Working Paper: Finance and Synchronization (2016)
Working Paper: Finance and synchronization (2016)
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