Trade Integration And Risk Sharing

Author : Aart Kraay,Jaume Ventura
Publisher : Unknown
Page : 56 pages
File Size : 47,8 Mb
Release : 2002
Category : Balance of trade
ISBN : UCSD:31822028261741

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Trade Integration and Risk Sharing by Aart Kraay,Jaume Ventura Pdf

What are the effects of increased trade in goods and services on the trade balance? We study the effects of reducing transport costs in a Ricardian model with complete asset markets. Trade integration has three effects on the structure of the economy: a reduction in the home bias in consumption, an increase in the degree of international competition in goods markets, and a reduction in real exchange rate volatility. The reduction in the home bias increases the volatility of the trade balance regardless of the source of shocks. Except for the case where supply shocks lead to counter-cyclical trade balances, (i) the increase in international competition also increases the volatility of the trade balance; and (ii) the reduction in real exchange rate volatility increases the volatility of the trade balance if risk aversion is low but lowers it if risk aversion is high. The opposite applies when supply shocks lead to counter-cyclical trade balances. We calibrate the model to U.S. data and provide a quantitative assessment of the effects of increased trade in services on the trade balance.

Author : M. Ayhan Kose,Eswar Prasad,Marco Terrones
Publisher : International Monetary Fund
Page : 48 pages
File Size : 46,9 Mb
Release : 2007-10
Category : Business & Economics
ISBN : UCSD:31822036080695

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How Does Financial Globalization Affect Risk Sharing? Patterns and Channels by M. Ayhan Kose,Eswar Prasad,Marco Terrones Pdf

In theory, one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing. This paper provides a comprehensive empirical evaluation of the patterns of risk sharing among different groups of countries and examines how international financial integration has affected the evolution of these patterns. Using a variety of empirical techniques, we conclude that there is at best a modest degree of international risk sharing, and certainly nowhere near the levels predicted by theory. In addition, only industrial countries have attained better risk sharing outcomes during the recent period of globalization. Developing countries have, by and large, been shut out of this benefit. The most interesting result is that even emerging market economies, which have experienced large increases in cross-border capital flows, have seen little change in their ability to share risk. We find that the composition of flows may help explain why emerging markets have not been able to realize this presumed benefit of financial globalization. In particular, our results suggest that portfolio debt, which has dominated the external liability stocks of most emerging markets until recently, is not conducive to risk sharing.

Author : M. Ayhan Kose
Publisher : Unknown
Page : 43 pages
File Size : 46,7 Mb
Release : 2009
Category : Electronic
ISBN : OCLC:1290852083

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How Does Financial Globalization Affect Risk Sharing? Patterns and Channels by M. Ayhan Kose Pdf

In theory, one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing. This paper provides a comprehensive empirical evaluation of the patterns of risk sharing among different groups of countries and examines how international financial integration has affected the evolution of these patterns. Using a variety of empirical techniques, we conclude that there is at best a modest degree of international risk sharing, and certainly nowhere near the levels predicted by theory. In addition, only industrial countries have attained better risk sharing outcomes during the recent period of globalization. Developing countries have, by and large, been shut out of this benefit. The most interesting result is that even emerging market economies, which have experienced large increases in cross-border capital flows, have seen little change in their ability to share risk. We find that the composition of flows may help explain why emerging markets have not been able to realize this presumed benefit of financial globalization. In particular, our results suggest that portfolio debt, which has dominated the external liability stocks of most emerging markets until recently, is not conducive to risk sharing.

Author : Falko Fecht,Hans Peter Grüner,Philipp Hartmann
Publisher : Unknown
Page : 0 pages
File Size : 45,7 Mb
Release : 2008
Category : Electronic
ISBN : 3865584667

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Financial Integration, Specialization and Systemic Risk by Falko Fecht,Hans Peter Grüner,Philipp Hartmann Pdf

Author : International Monetary Fund. Asia and Pacific Dept
Publisher : International Monetary Fund
Page : 57 pages
File Size : 48,9 Mb
Release : 2011-10-07
Category : Business & Economics
ISBN : 9781616351274

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Regional Economic Outlook, October 2011, Asia and Pacific by International Monetary Fund. Asia and Pacific Dept Pdf

In line with the weaker global outlook, growth in Asia is expected to be slightly lower in 2011-12 than forecast in April 2011, mainly as a result of weakening external demand, but the expansion should remain healthy, supported by domestic demand, which has been generally resilient. Overheating pressures remain elevated in a number of economies, with credit growth still robust and inflation momentum generally high, though inflation is expected to recede modestly after peaking in 2011. The sell-off in Asian financial markets in August and September 2011 underscores that an escalation of euro area financial turbulence and a renewed slowdown in the United States could have severe macroeconomic and financial spillovers to Asia. Against this backdrop, Asian low-income and Pacific Island economies face particular challenges in the near and medium term. In low-income countries, the fight against inflation is complicated by strong second-round effects, the need to phase out subsidies, and less well-anchored inflation expectations. Pacific Island economies need to undertake further structural reforms to lift potential growth. The downside risks to growth amid persistent overheating pressures present Asian policymakers with a delicate balancing act, as they need to guard against risks to growth but also limit the adverse impact of prolonged easy financial conditions on inflation and balance sheet vulnerabilities. At the same time, the weakness in global demand only confirms that Asia would greatly benefit from further progress in rebalancing growth by developing domestic sources of demand. In addition to structural reforms, this would require a reprioritization of fiscal spending, in order to create fiscal space for critical infrastructure investment and social priority expenditure.

Author : Marcus Kappler,Andreas Sachs
Publisher : Springer Science & Business Media
Page : 194 pages
File Size : 40,9 Mb
Release : 2012-07-30
Category : Business & Economics
ISBN : 9783790828559

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Business Cycle Synchronisation and Economic Integration by Marcus Kappler,Andreas Sachs Pdf

This book offers the reader a state-of-the-art overview on theory and empirics of business cycle synchronisation, structural reform and economic integration. Focusing on the ongoing integration process in the euro area and the EU, it analyses the integration process that has taken place since the 1980s and which is marked by the advent of the euro and the substantial enlargement that resulted from the accession of 12 new Member States in East and Southern Europe.

Author : Mr.Ayhan Kose,Mr.Eswar Prasad,Mr.Marco Terrones
Publisher : International Monetary Fund
Page : 29 pages
File Size : 53,9 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 : Philippe Auffret
Publisher : World Bank Publications
Page : 40 pages
File Size : 47,7 Mb
Release : 2003
Category : Caribbean Area
ISBN : 8210379456XXX

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High consumption Volatility by Philippe Auffret Pdf

A history of repeated external and domestic shocks has made economic insecurity a major concern across the Caribbean region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author shows that despite high consumption growth, the Caribbean region suffers from a high volatility of consumption that decreases household welfare. After presenting some empirical evidence that consumption volatility is higher in the Caribbean region than in the rest of the world, he makes some empirically testable inferences that help explain consumption volatility. The author develops a conceptual framework for analyzing the effects of catastrophic events on household and aggregate welfare. According to this framework, the volatility of consumption comes from production shocks that are transformed into consumption shocks mostly because of underdeveloped or ineffective risk-management mechanisms. Auffret conducts an empirical analysis of the impact of catastrophic events on 16 countries (6 from the Caribbean region and 10 from Latin America) from 1970-99 and shows that catastrophic events lead to: 1) A substantial decline in the growth of output. 2) A substantial decline in the growth of investment. 3) A more moderate decline in consumption growth (most of the decline is in private consumption, while public consumption declines moderately. 4) A worsening of the current account of the balance of payments.

Author : Philippe Auffret
Publisher : World Bank Publications
Page : 36 pages
File Size : 46,8 Mb
Release : 2003
Category : Casualty insurance
ISBN : 8210379456XXX

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Catastrophe Insurance Market in the Caribbean Region by Philippe Auffret Pdf

The Caribbean region suffers from a high degree of economic volatility. A history of repeated external and domestic shocks has made economic insecurity a major concern across the region. Of particular concern to all households, especially the poorest segments of the population, is the exposure to shocks that are generated by catastrophic events or natural disasters. The author develops a conceptual framework for risk management and shows that the insurance market for catastrophic risk in the Caribbean region remains a "thin" market characterized by "high" prices and "low" transfer of risk. He analyzes the possible market failures which could explain the lack of development of the catastrophe insurance market. Finally he outlines a set of recommendations for public sector interventions.

Author : Ding Ding,Mr. Raphael W. Lam,Shanaka J. Peiris
Publisher : International Monetary Fund
Page : 26 pages
File Size : 52,9 Mb
Release : 2014-07-16
Category : Business & Economics
ISBN : 9781498393669

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Future of Asia’s Finance: How Can it Meet Challenges of Demographic Change and Infrastructure Needs? by Ding Ding,Mr. Raphael W. Lam,Shanaka J. Peiris Pdf

There is a role for Asia’s financial sector to play to address the challenges associated with the region’s changing demographics and infrastructure investment needs. Enhancing financial innovation and integration in the region could facilitate intra-regional financial flows and mobilize resources from the aging savers in industrialized Asia to finance infrastructure investment in emerging Asia. Strengthening the financial ties within the region as well as with the global financial markets alongside appropriate prudential frameworks could also help diversify sources of financing and reduce the cost of funding in emerging Asia. Finally, financial deepening could help ease the potential overheating from scaling up infrastructure investment and hence achieve a more balanced growth in the region.

Author : George-Marios Angeletos
Publisher : DIANE Publishing
Page : 42 pages
File Size : 47,7 Mb
Release : 2011-04
Category : Reference
ISBN : 9781437980240

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Financial Integration, Entrepreneurial Risk and Global Dynamics by George-Marios Angeletos Pdf

How does financial integration impact capital accumulation, current-account dynamics, and cross-country inequality? This paper investigates this question within a two-country, general-equilibrium, incomplete-markets model that focuses on the importance of idiosyncratic entrepreneurial risk -- a risk that introduces, not only a precautionary motive for saving, but also a wedge between the interest rate and the marginal product of capital. This friction provides a simple resolution to the empirical puzzle that capital often fails to flow from the rich or slow-growing countries to the poor or fast-growing ones, and a distinct set of policy lessons regarding the intertemporal costs and benefits of capital-account liberalization. Illus. A print on demand report.

Author : Mr.Akito Matsumoto,Mr.Robert P. Flood,Ms.Nancy P. Marion
Publisher : International Monetary Fund
Page : 40 pages
File Size : 49,5 Mb
Release : 2009-09-01
Category : Business & Economics
ISBN : 9781451873566

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International Risk Sharing During the Globalization Era by Mr.Akito Matsumoto,Mr.Robert P. Flood,Ms.Nancy P. Marion Pdf

Though theory suggests financial globalization should improve international risk sharing, empirical support has been limited. We develop a simple welfare-based measure that captures how far countries are from the ideal of perfect risk sharing. We then take it to data and find international risk sharing has, indeed, improved during globalization. Improved risk sharing comes mostly from the convergence in rates of consumption growth among countries rather than from synchronization of consumption at the business cycle frequency. Our finding explains why many existing measures fail to detect improved risk sharing-they focus only on risk sharing at the business cycle frequency.

Author : Mr.Ashoka Mody,Mr.Robert P. Flood
Publisher : International Monetary Fund
Page : 168 pages
File Size : 48,9 Mb
Release : 2004-06-10
Category : Business & Economics
ISBN : 1589063201

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IMF Staff Papers, Volume 51, Special Issue, IMF Fourth Annual Research Conference by Mr.Ashoka Mody,Mr.Robert P. Flood Pdf

This is the 2004 (Volume 51) Special Issue of IMF Staff Papers, which includes 6 selected papers (from more than 20) that were presented at the IMF's Fourth Annual Research Conference, November 6-7, 2003.

Author : Joshua Aizenman,Brian Pinto
Publisher : Cambridge University Press
Page : 615 pages
File Size : 46,9 Mb
Release : 2005-10-03
Category : Business & Economics
ISBN : 9781139446945

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Managing Economic Volatility and Crises by Joshua Aizenman,Brian Pinto Pdf

Economic volatility has come into its own after being treated for decades as a secondary phenomenon in the business cycle literature. This evolution has been driven by the recognition that non-linearities, long buried by the economist's penchant for linearity, magnify the negative effects of volatility on long-run growth and inequality, especially in poor countries. This collection organizes empirical and policy results for economists and development policy practitioners into four parts: basic features, including the impact of volatility on growth and poverty; commodity price volatility; the financial sector's dual role as an absorber and amplifier of shocks; and the management and prevention of macroeconomic crises. The latter section includes a cross-country study, case studies on Argentina and Russia, and lessons from the debt default episodes of the 1980s and 1990s.

Author : Michael Szenberg,Lall Ramrattan,Aron A. Gottesman
Publisher : OUP Oxford
Page : 372 pages
File Size : 44,5 Mb
Release : 2006-08-24
Category : Business & Economics
ISBN : 9780191538353

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Samuelsonian Economics and the Twenty-First Century by Michael Szenberg,Lall Ramrattan,Aron A. Gottesman Pdf

This volume illuminates and critically assesses Paul A. Samuelson's voluminous and groundbreaking contributions to the field of economics. The volume includes contributions from eminent scholars, including 6 Nobel Laureates, covering the extraordinary depth and breadth of Samuelson's contributions. Samuelson, the first American economist to win the Nobel prize in 1970, was the foremost voice in economics in the latter half of the 20th century. He single-handedly transformed the discipline by creating a new way of presenting economics, making it possible for it to be cast all in mathematical terms. Samuelson developed broad frameworks, such as the neoclassical synthesis, a mixed economy, and the surrogate production function, which provided practitioners with a vision for research. Samuelson's contributions to economics are rich, complex, consequential, and relevant to the ordinary economics of life. The quality of Samuelson's output and methods leave no doubt that his contributions continue to be timely and relevant even in the 21st century. Ideal as a reference or an introduction to Samuelson's work, this is a must-have for students and academics alike.