Business Cycles and the Asset Structure of Foreign Trade

Marianne Baxter () and Mario Crucini ()

No 4975, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: International financial market linkages are widely believed to be important for the international transmission of business cycles, since these govern the extent to which individuals can smooth consumption in the presence of country-specific shocks to income. This paper develops a two-country, general equilibrium model with restricted asset trade and provides a detailed analysis of the channels through which these financial linkages affect international business cycles. Our central finding is that the absence of complete financial integration may not be important if the shocks to national economies are of low persistence, or are transmitted rapidly across countries over time. However, if shocks are highly persistent or are not transmitted internationally, the extent of financial integration is central to the international transmission of business cycles.

JEL-codes: F11 F30 (search for similar items in EconPapers)
Date: 1994-12
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published as International Economic Review, Nov 1995

Downloads: (external link)
http://www.nber.org/papers/w4975.pdf (application/pdf)

Related works:
Journal Article: Business Cycles and the Asset Structure of Foreign Trade (1995)
Working Paper: Business cycles and the asset structure of foreign trade (1992)
Working Paper: Business Cycles and the Asset Structure of Foreign Trade (1991)
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:4975

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4975

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 ().