The Real Effects of Financial Integration

Jean Imbs

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Abstract: This paper shows correlations in GDP fluctuations rise with financial integration. Finance serves to increase international correlations in both consumption and GDP fluctuations, which explains the persistent gap between the two in the data, a quantity puzzle. The positive association between financial integration and GDP correlation constitutes a puzzle, as theory suggests a negative relation if anything. Nevertheless, it prevails in the data even after the effects of finance on trade and specialization are accounted for.

Keywords: Financial Integration; International Business Cycles; Risk Sharing; Quantity Puzzle (search for similar items in EconPapers)
Date: 2006-03
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Citations: View citations in EconPapers (218)

Published in Journal of International Economics, 2006, 68 (2), pp.296-324. ⟨10.1016/j.jinteco.2005.05.003⟩

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Journal Article: The real effects of financial integration (2006)
Working Paper: The Real Effects of Financial Integration (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00612566

DOI: 10.1016/j.jinteco.2005.05.003

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