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International Business Cycle and Financial Intermediation

Max Gillman (), Tamas Csabafi and Ruthira Naraidoo ()

No 2018_7, CEU Working Papers from Department of Economics, Central European University

Abstract: The paper extends a standard two-country international real business cycle model to include financial intermediation by banks of loans and government bonds. The paper contributes an explanation for both the US relative to the Euro-area, and the US relative to China, of cross-country correlations of loan rates, deposit rates, and the loan premia. It shows a type of financial retrenchment for the US relative to both Europe and China following a negative bank productivity shock, such as during the 2008 crisis. After 2008, results suggest the Euro-area has been more financially integrated with the US, and China less financially integrated.

New Economics Papers: this item is included in nep-bec and nep-dge
Date: 2018-11-07
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Working Paper: International Business Cycle and Financial Intermediation (2018) Downloads
Working Paper: International Business Cycle and Financial Intermediation (2016) Downloads
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