This paper provides evidence for a significant relation between international financial markets’ integration and output volatility. In the framework of a threshold model, it is shown empirically that this relation depends on country’s financial risk. Financial risk indicates a country’s...

The goal of this paper is to study the effects of globalization on the workings of asset markets and welfare. To do this, we adopt a technological view of the globalization process. That is, we model this process as consisting of a gradual (and exogenous) reduction in the costs of shipping goods...

This paper focuses on emerging markets government bonds issued in local currency with different maturities. Foreign investors face interest rate, currency, and credit risks. We consider the entire term structure of carry trade returns and find that, while the default premium does not contribute...