How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?

Al-Abri, Almukhtar

How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?

Journal of International Financial Markets, Institutions and Money, 2014, vol. 33, issue C, 335-353

Abstract: This paper presents empirical evidence suggesting that the volatility, trend-growth, and shock-duration of terms-of-trade (TOT) are important drivers of the degree and composition of international financial integration (IFI). Our results are based on a panel of 55 primary-commodity exporting countries during 1980–2007. The findings reveal that TOT trend-growth has larger impact on IFI compared to TOT volatility. Also, higher TOT volatility is robustly associated with greater cross-holdings of foreign assets and lower cross-holdings of foreign liabilities. Another notable finding is that longer duration of TOT shocks seems to shift IFI towards equity assets.

Keywords: Terms-of-trade; Financial globalization; International investment positions; Foreign direct investment; Portfolio investment; Developing countries (search for similar items in EconPapers)
JEL-codes: F21 F32 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:33:y:2014:i:c:p:335-353

DOI: 10.1016/j.intfin.2014.09.002

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