The Elusive Gains from International Financial Integration

Pierre-Olivier Gourinchas () and Olivier Jeanne ()

No 3902, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Standard theoretical arguments tell us that countries with relatively little capital benefit from financial integration as foreign capital flows in and speeds up the process of convergence. We show in a calibrated neoclassical model that conventionally measured welfare gains from this type of convergence appear relatively limited for the typical emerging country. The welfare gain from switching from financial autarky to perfect capital mobility is roughly equivalent to a 1% permanent increase in domestic consumption for the typical emerging economy. This is negligible relative to the potential welfare gain of a take-off in domestic productivity of the magnitude observed in some countries.

Keywords: capital flows; convergence; development accounting; international financial integration (search for similar items in EconPapers)
JEL-codes: F02 F20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2003-05
View list of references View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP3902.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: The Elusive Gains from International Financial Integration (2003)
Working Paper: The Elusive Gains from International Financial Integration (2004)
Journal Article: The Elusive Gains from International Financial Integration (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:3902

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP3902.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().