Business Cycle Volatility and Openness: An Exploratory Cross-Section Analysis

Assaf Razin and Andrew Rose

No 4208, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper links business cycle volatility to barriers on international mobility of goods and capital. Theory predicts that capital market integration should lower consumption volatility while raising investment volatility, if most shocks are country-specific and transitory. The removal of barriers to trade in goods should enhance specialization and hence output volatility. We test these ideas using a unique panel data set which includes indicators of barriers to trade in both goods and capital flows. However, our empirical results indicate that neither the degree of capital mobility, nor the degree of goods mobility is strongly correlated with the volatility of consumption, investment or output. This may reflect the fact that many business cycle shocks are both persistent and common to many countries.

Date: 1992-11
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (59)

Published as Capital Mobility: The Impact on Consumption, Investment and Growth, ed. Leo Leiderman and Assaf Razin, pp. 48-75, Cambridge University Press, 1994

Downloads: (external link)
http://www.nber.org/papers/w4208.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:4208

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4208

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().