International financial intermediation and aggregate fluctuations under alternative exchange rate regimes

Jeremy Greenwood and Stephen Williamson

No 112, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: This paper presents a two-country overlapping generations model in which financial intermediation arises endogenously as an incentive-compatible means of economizing on monitoring costs. Because of the existence of transactions costs, money markets in the two countries are segmented and investors have differential access to international credit markets. The model is used to generate predictions about the role of international intermediation in economic development and to examine the nature of business cycle phenomena across alternative exchange rate regimes. Disturbances are propagated by a credit allocation mechanism, which also lends a novel flavor to the model?s long-run properties.

Keywords: International finance; Foreign exchange - Law and legislation; Foreign exchange rates (search for similar items in EconPapers)
Date: 1988
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: International financial intermediation and aggregate fluctuations under alternative exchange rate regimes (1989)
Working Paper: INTERNATIONAL FINANCIAL INTERMEDIATION AND AGGREGATE FLUCTUATIONS UNDER ALTERNATIVE EXCHANGE RATE REGIMES (1989)
Working Paper: INTERNATIONAL FINANCIAL INTERMEDIATION AND AGGREGATE FLUCTUATIONS UNDER ALTERNATIVE EXCHANGE RATE REGIMES (1988)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:112

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