We analyze the implications of financial openness to macroeconomic volatility in a small open economy. Major macroeconomic aggregates show non-monotonic volatility patterns with respect to the degree of financial openness in the model without domestic financial frictions. The introduction of...

"This book was developed as a text for business school courses in macroeconomics. It has been used in the Core MBA and Kelley Direct Programs at the Indiana University Kelley School of Business, the German International Graduate School of Management and Administration in Hannover, the German...