This paper evaluates the consequences of the integration of international asset markets when goods markets are characterized by price rigidities. Using an open economy general equilibrium model with volatility in the money markets, we show that such an integration is not universally beneficial....

This paper develops a dynamic two-country neoclassical stochastic growth model with incomplete markets. Short-term credit flows can be excessive and reverse suddenly. The equilibrium outcome is constrained inefficient due to pecuniary externalities. First, an undercapitalized country borrows too...

This paper discusses whether the integration of international financial markets affects business cycle fluctuations. In the framework of a new open economy macro-model, we show that the link between financial openness and business cycle volatility depends on the nature of the underlying shock....

This paper uses a dynamic general equilibrium two-country optimizing sticky-price model to analyze the consequences of international financial market integration for the propagation of asymmetric productivity shocks in a monetary union. The model implies that business cycle volatility is higher...

Theoretical research on the determinants of business-cycle fluctuations implies that the degree of international financial integration can have important implications for the propagation of, e.g., macroeconomic policy shocks in an open economy. An important assumption underlying this research is...

This paper discusses whether the integration of international financial markets affects business cycle fluctuations. In the framework of a new open economy macro-model, we show that the link between financial openness and business cycle volatility depends on the nature of the underlying shock....

This paper uses a dynamic general equilibrium two-country optimizing sticky-price model to analyze the consequences of international financial market integration for the propagation of asymmetric productivity shocks in a monetary union. The model implies that business cycle volatility is higher...

This note discusses two complex issues. First, why might a country want to reduce its current account deficit or surplus? And second, why might the international community ask for more? In general, there are both domestic and multilateral reasons for countries to reduce current account deficits...

The dynamic process of integration of national economies has a long history, with two distinct waves: one, from the middle of the 19th century until its interruption with outbreak of the First World War in 1913 till the end of the Second World War in 1945. The second wave is ongoing dating from...

This paper assesses the suitability and constraints of having a unified currency in Association of Southeast Asian Nations (ASEAN) according to the optimum currency area theory and by analyzing the result of symmetry shocks of macroeconomic variables. The paper concludes that although there are...