The macroeconomic effects of world trade in financial assets

Harold Cole

Quarterly Review, 1993, vol. 17, issue Sum, 12-21

Abstract: This article analyzes some of the potential effects of increased international financial integration within a simple two-country model. In the model, the article considers a switch in the menu of internationally traded financial securities from bonds to complete contingent claims and examines the impact of this switch on the stochastic properties, including the cross-country correlations, of standard macroeconomic aggregates like output, consumption, and labor effort, as well as the trade balance.

Keywords: International; finance (search for similar items in EconPapers)
Date: 1993
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