Since the primary role of international financial linkages is to facilitate consumption smoothing in the face of country-specific shocks, the degree of international financial integration should play an important role in the international transmission of business cycles. This paper therefore...

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,...

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,...