Financial Integration And Macroeconomic Volatility

Author : Mr.Ayhan Kose,Mr.Eswar Prasad,Mr.Marco Terrones
Publisher : International Monetary Fund
Page : 29 pages
File Size : 47,6 Mb
Release : 2003-03-01
Category : Business & Economics
ISBN : 9781451846997

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Financial Integration and Macroeconomic Volatility by Mr.Ayhan Kose,Mr.Eswar Prasad,Mr.Marco Terrones Pdf

This paper examines the impact of international financial integration on macroeconomic volatility in a large group of industrial and developing economies over the period 1960-99. We report two major results: First, while the volatility of output growth has, on average, declined in the 1990s relative to the three preceding decades, we also document that, on average, the volatility of consumption growth relative to that of income growth has increased for more financially integrated developing economies in the 1990s. Second, increasing financial openness is associated with rising relative volatility of consumption, but only up to a certain threshold. The benefits of financial integration in terms of improved risk-sharing and consumption-smoothing possibilities appear to accrue only beyond this threshold.

Author : M. Ayhan Kose,Eswar Prasad,Marco Terrones
Publisher : International Monetary Fund
Page : 44 pages
File Size : 51,9 Mb
Release : 2005
Category : Business & Economics
ISBN : UCSD:31822030158679

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How Do Trade and Financial Integration Affect the Relationship Between Growth and Volatility? by M. Ayhan Kose,Eswar Prasad,Marco Terrones Pdf

The influential work of Ramey and Ramey (1995) highlighted an empirical relationship that has now come to be regarded as conventional wisdom-that output volatility and growth are negatively correlated. We reexamine this relationship in the context of globalization-a term typically used to describe the phenomenon of growing international trade and financial integration that has intensified since the mid-1980s. Using a comprehensive new data set, we document that, while the basic negative association between growth and volatility has been preserved during the 1990s, both trade and financial integration significantly weaken this negative relationship. Specifically, we find that, in a regression of growth on volatility and other controls, the estimated coefficient on the interaction between volatility and trade integration is significantly positive. We find a similar, although less significant, result for the interaction of financial integration with volatility.

Author : Rudrani Bhattacharya,Mr.Ila Patnaik,Madhavi Pundit
Publisher : International Monetary Fund
Page : 26 pages
File Size : 49,7 Mb
Release : 2013-05-22
Category : Business & Economics
ISBN : 9781484354605

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Emerging Economy Business Cycles by Rudrani Bhattacharya,Mr.Ila Patnaik,Madhavi Pundit Pdf

This paper analyses the extent to which financial integration impacts the manner in which terms of trade affect business cycles in emerging economies. Using a s mall open economy model, we show that as capital account openness increases in an economy that faces trade shocks, business cycle volatility reduces. For an economy with limited financial openness, and a relatively open trade account, a model with exogenous terms of trade shocks is able to replicate the features of the business cycle.

Author : J. Fanelli
Publisher : Springer
Page : 403 pages
File Size : 47,5 Mb
Release : 2008-01-17
Category : Business & Economics
ISBN : 9780230590182

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Macroeconomic Volatility, Institutions and Financial Architectures by J. Fanelli Pdf

The deregulation of domestic financial markets and the capital account in developing countries has frequently been associated with financial turmoil and macro volatility. The book analyzes the experiences of several countries, drawing implications for building development-friendly domestic and international financial architectures.

Author : Cevdet Denizer,Murat F. Iyigun,Ann L. Owen
Publisher : World Bank Publications
Page : 34 pages
File Size : 45,5 Mb
Release : 2000
Category : Banks and banking
ISBN : 8210379456XXX

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Finance and Marcoeconomic Volatility by Cevdet Denizer,Murat F. Iyigun,Ann L. Owen Pdf

Countries with more developed financial sectors, experience fewer fluctuations in real per capita output, consumption, and investment growth. But the manner in which the financial sector develops matters. The relative importance of banks in the financial system is important in explaining consumption, and investment volatility. The proportion of credit provided to the private sector, best explains volatility of consumption, and output. The authors generate their main results using fixed-effects estimates with panel data from seventy countries for the years 1956-98. Their general findings suggest that the risk management, and information processing provided by banks, maybe especially important in reducing consumption, and investment volatility. The simple availability of credit to the private sector, probably helps smooth consumption, and GDP.

Author : Ms.Era Dabla-Norris,Mr.Narapong Srivisal
Publisher : International Monetary Fund
Page : 36 pages
File Size : 41,8 Mb
Release : 2013-01-30
Category : Business & Economics
ISBN : 9781475543988

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Revisiting the Link Between Finance and Macroeconomic Volatility by Ms.Era Dabla-Norris,Mr.Narapong Srivisal Pdf

This paper examines the impact of financial depth on macroeconomic volatility using a dynamic panel analysis for 110 advanced and developing countries. We find that financial depth plays a significant role in dampening the volatility of output, consumption, and investment growth, but only up to a certain point. At very high levels, such as those observed in many advanced economies, financial depth amplifies consumption and investment volatility. We also find strong evidence that deeper financial systems serve as shock absorbers, mitigating the negative effects of real external shocks on macroeconomic volatility. This smoothing effect is particularly pronounced for consumption volatility in environments of high exposure - when trade and financial openness are high - suggesting significant gains from further financial deepening in developing countries.

Author : Ms.Aude Pommeret,Ms.Anne Epaulard
Publisher : INTERNATIONAL MONETARY FUND
Page : 0 pages
File Size : 55,5 Mb
Release : 2005-04-01
Category : Business & Economics
ISBN : 1451860862

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Financial Integration, Growth, and Volatility by Ms.Aude Pommeret,Ms.Anne Epaulard Pdf

The aim of this paper is to evaluate the welfare gains from financial integration for developing and emerging market economies. To do so, we build a stochastic endogenous growth model for a small open economy that can (i) borrow from the rest of the world, (ii) invest in foreign assets, and (iii) receive foreign direct investment (FDI). The model is calibrated on 32 emerging market and developing economies for which we evaluate the upper bound for the welfare gain from financial integration. For plausible values of preference parameters and actual levels of financial integration, the mean welfare gain from financial integration is about 10 percent of initial wealth. Compared with financial autarky, actual levels of financial integration translate into slightly higher annual growth rates (around 0.4 percentage point per year.)

Author : Mr.Ayhan Kose,Mr.Julian Di Giovanni,Mr.Andre Faria,Mr.Martin Schindler,Mr.Giovanni Dell'Ariccia,Mr.Paolo Mauro,Mr.Jonathan David Ostry,Mr.Marco Terrones
Publisher : International Monetary Fund
Page : 46 pages
File Size : 44,6 Mb
Release : 2008-12-16
Category : Business & Economics
ISBN : 9781589067486

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Reaping the Benefits of Financial Globalization by Mr.Ayhan Kose,Mr.Julian Di Giovanni,Mr.Andre Faria,Mr.Martin Schindler,Mr.Giovanni Dell'Ariccia,Mr.Paolo Mauro,Mr.Jonathan David Ostry,Mr.Marco Terrones Pdf

Financial globalization has increased dramatically over the past three decades, particularly for advanced economies, while emerging market and developing countries experienced more moderate increases. Divergences across countries stem from different capital control regimes, and factors such as institutional quality and domestic financial development. Although, in principle, financial globalization should enhance international risk sharing, reduce macroeconomic volatility, and foster economic growth, in practice its effects are less clear-cut. This paper envisages a gradual and orderly sequencing of external financial liberalization and complementary reforms in macroeconomic policy framework as essential components of a successful liberalization strategy.

Author : Mr.Ayhan Kose,Mr.Kenneth Rogoff,Mr.Eswar Prasad,Shang-Jin Wei
Publisher : International Monetary Fund
Page : 68 pages
File Size : 43,5 Mb
Release : 2003-09-03
Category : Business & Economics
ISBN : 1589062213

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Effects of Financial Globalization on Developing Countries by Mr.Ayhan Kose,Mr.Kenneth Rogoff,Mr.Eswar Prasad,Shang-Jin Wei Pdf

This study provides a candid, systematic, and critical review of recent evidence on this complex subject. Based on a review of the literature and some new empirical evidence, it finds that (1) in spite of an apparently strong theoretical presumption, it is difficult to detect a strong and robust causal relationship between financial integration and economic growth; (2) contrary to theoretical predictions, financial integration appears to be associated with increases in consumption volatility (both in absolute terms and relative to income volatility) in many developing countries; and (3) there appear to be threshold effects in both of these relationships, which may be related to absorptive capacity. Some recent evidence suggests that sound macroeconomic frameworks and, in particular, good governance are both quantitatively and qualitatively important in affecting developing countries’ experiences with financial globalization.

Author : Maria Sole Pagliari,Swarnali Ahmed Hannan
Publisher : International Monetary Fund
Page : 58 pages
File Size : 40,9 Mb
Release : 2017-03-07
Category : Business & Economics
ISBN : 9781475585261

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The Volatility of Capital Flows in Emerging Markets by Maria Sole Pagliari,Swarnali Ahmed Hannan Pdf

Capital flow volatility is a concern for macroeconomic and financial stability. Nonetheless, literature is scarce in this topic. Our paper sheds light on this issue in two dimensions. First, using quarterly data for 65 countries over the period 1970Q1-2016Q1, we construct three measures of volatility, for total capital flows and key instruments. Second, we perform panel regressions to understand the determinants of volatility. The measures show that the volatility of all instruments is prone to bouts, rising sharply during global shocks like the taper tantrum episode. Capital flow volatility thus remains a challenge for policy makers. The regression results suggest that push factors can be more important than pull factors in explaining volatility, illustrating that the characteristics of volatility can be different from those of the flows levels.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 87 pages
File Size : 51,8 Mb
Release : 2003-12-02
Category : Business & Economics
ISBN : 9781498329835

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Effects of Financial Globalization on Developing Countries - Some Empirical Evidence by International Monetary Fund Pdf

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Author : Tamim A. Bayoumi
Publisher : University of Michigan Press
Page : 178 pages
File Size : 48,9 Mb
Release : 1997
Category : Business & Economics
ISBN : 0472108700

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Financial Integration and Real Activity by Tamim A. Bayoumi Pdf

Globalization, financial deregulation, a single European currency . . . this book examines what all these changes mean for the world economy.

Author : Pierre-Richard Agénor
Publisher : Unknown
Page : 48 pages
File Size : 55,9 Mb
Release : 1998
Category : Capital movements
ISBN : UCSD:31822026156158

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Volatility and the Welfare Costs of Financial Market Integration by Pierre-Richard Agénor Pdf

Author : Mr.Ayhan Kose,Mr.Eswar Prasad,Mr.Marco Terrones
Publisher : International Monetary Fund
Page : 39 pages
File Size : 43,5 Mb
Release : 2003-12-01
Category : Business & Economics
ISBN : 9781451875874

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Volatility and Comovement in a Globalized World Economy by Mr.Ayhan Kose,Mr.Eswar Prasad,Mr.Marco Terrones Pdf

This paper analyzes the evolution of volatility and cross-country comovement in output, consumption, and investment fluctuations using two distinct datasets. The results suggest that there has been a significant decline in the volatility of business cycle fluctuations and a slight increase in the degree of cyclical comovement among industrialized countries over time. However, for emerging market economies, financial globalization appears to have been associated, on average, with an increase in macroeconomic volatility as well as declines in the degree of comovement of output and consumption growth with their corresponding world aggregates.

Author : Michael Devereux,Research Fellow at the Institute for Fiscal Studies London Professor of Finance Department of Economics Michael Devereux,Philip R Lane,Cyn-Young Park,Shang-Jin Wei
Publisher : Taylor & Francis
Page : 342 pages
File Size : 49,7 Mb
Release : 2011-05-03
Category : Business & Economics
ISBN : 9781136847622

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The Dynamics of Asian Financial Integration by Michael Devereux,Research Fellow at the Institute for Fiscal Studies London Professor of Finance Department of Economics Michael Devereux,Philip R Lane,Cyn-Young Park,Shang-Jin Wei Pdf

The ongoing global financial crisis has manifested a remarkable degree of global financial integration—and its implications—for emerging Asian financial markets. The current crisis will not and should not deter the progress that the region has made toward financial openness and integration. However, events like this clearly demonstrate that financial liberalization and integration is not without risks. Hence, emerging Asian economies' growing financial ties have motivated us to look closer at the repercussions of increased financial integration and evaluate the benefits of risk sharing and better access to international capital markets against the costs of cross-border financial contagion. The crisis also presents a timely opportunity for the region’s policy makers to rethink their strategies for financial deregulation and liberalization and to reconsider a next step to integrate emerging East Asia’s financial markets further. However, doing so requires deeper understanding of financial market integration. While much has been said in both academic and policy circles about financial globalization and regional financial integration as separate areas of study, existing research has been relatively silent on the dynamics between these two distinctive forces. The book addresses this gap in financial literature and assesses financial integration in emerging East Asia at both regional and global levels. The publication studies the factors driving the progress of regional financial integration in relation to financial globalization and identifies the relevant policy challenges facing emerging market economies in the region. Chapters look into three broad aspects of regional and global financial market integration: (i) measurement of regional and global financial integration, (ii) understanding dynamics of regional financial integration versus global financial integration, and (iii) welfare implications from regional financial market integration amid financial globalization. Against this context, academics, policy makers, and other readers will appreciate the rigorous research contribution provided by the book.