Trade Integration and Risk Sharing

Information Globalization, Risk Sharing, and International Trade

Information frictions are often invoked to explain low levels of international trade beyond those that measured trade frictions (tariffs, transportation costs, etc.) can explain. But to explain why international trade is lower then domestic trade, home firms have to know something that foreigners do not. Without information asymmetry, domestic trade and foreign trade would be inhibited equally....

Financial integration and international risk sharing

Conventional wisdom suggests that countries that are more financially integrated can better insure against risk. Despite widespread deregulation and financial integration in recent history, there is little evidence that countries have increased risk sharing. This work shows financial integration does not necessarily lead to significant improvement in risk sharing if financial contracts are inco...

R&D Spillovers, Trade Integration And Expansion Of Trade Flows In East- West Asia And Pacific

Trade Costs, Asset Market Frictions and Risk Sharing

I use bilateral import data to test for the role of trade costs and asset market frictions in impeding international consumption risk sharing. Trade costs play a significant role. I do not reject the null of optimal risk sharing within OECD countries, though I do reject for the world as a whole. I calculate the impact on ex-post welfare of moving from historical asset market frictions to optima...

Financial integration and consumption risk sharing and smoothing

Article history: Received 25 April 2012 Received in revised form 13 August 2013 Accepted 14 August 2013 Available online 27 August 2013 While paying careful attention to the stochastic properties of income process, this paper tests the joint rational expectation and permanent income hypothesis (RE/PIH) to clarify how and to what degree financial integration delinks national income and consumpti...