 Asymmetric international risk sharing and the business cyclePierfederico Asdrubali, Soyoung Kim and Haerang Park Journal of International Money and Finance, 2025, vol. 156, issue C Abstract: International risk sharing in OECD countries weakens during domestic recessions, when its role is most needed. Instead, no significant changes emerge during boom periods or in relation to the global business cycle. The asymmetry in the risk sharing response is driven mainly by dis-smoothing effects in the capital market channel and the credit market channel. Specifically, interest payments to abroad and credit constraints of households increase during domestic recessions, limiting the smoothing role of risk sharing channels. However, countries with more internationally integrated financial markets and corporate disclosure can mitigate the dis-smoothing effects of these two channels and thus the asymmetry in international risk sharing. These findings contribute to rationalizing heterogeneous results in the literature on the impact of globalization and financial frictions on international risk sharing. Keywords: International risk sharing; Business cycle; Financial frictions; Asymmetry (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:156:y:2025:i:c:s0261560625000610 DOI: 10.1016/j.jimonfin.2025.103326 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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