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Financial Integration and Growth in a Risky World

Nicolas Coeurdacier, Helene Rey () and Pablo Winant

No 21817, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The debate on the benefits of financial integration is revisited in a two-country neoclassical growth model with aggregate uncertainty. Gains from more efficient capital allocation and gains from risk sharing are accounted for simultaneously|together with their interaction. Global numerical methods allow for meaningful welfare comparisons. Gains from integration are quantitatively small, even for riskier and capital scarce emerging economies. These countries import capital for efficiency reasons before exporting it for self-insurance, leading to capital ows and growth reversals along the transition. This opens the door to a richer set of empirical implications than previously considered in the literature.

JEL-codes: F21 F3 F43 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-opm
Note: AP IFM
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Published as Nicolas Coeurdacier & Héléne Rey & Pablo Winant, 2019. "Financial Integration and Growth in a Risky World," Journal of Monetary Economics, .

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Journal Article: Financial integration and growth in a risky world (2020) Downloads
Working Paper: Financial Integration and Growth in a Risky World (2015) Downloads
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