Financial Globalization and Animal Spirits

Using a multi-country general equilibrium model, we demonstrate that when agents face credit constraints in an international financial market, rational expectations, which are ex-post heterogeneous between countries, cause business fluctuations. If the international financial market becomes perfect, only a unique perfect foresight equilibrium is obtained, implying that no business fluctuations appear.

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Year of publication:	2012-01-22
Authors:	Kunieda, Takuma ; Shibata, Akihisa
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Business fluctuations \| Financial globalization \| Sunspots \| Heterogeneous agents \| Rational expectations

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	F49 - Macroeconomic Aspects of International Trade and Finance. Other ; E44 - Financial Markets and the Macroeconomy ; F36 - Financial Aspects of Economic Integration
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009422093