Understanding the International Great Moderation Understanding the International Great Moderation * Very Preliminary and Incomplete
نویسندگان
چکیده
The majority of OECD countries has experienced a reduction in the volatility of output during the last two decades. This period is also characterized by the liberalization of the capital accounts of these countries. This paper examines whether capital markets liberalization can lead to lower macroeconomic volatility. We study a business cycle model with multiple countries and financial market frictions and show that financial liberalization can lead to lower aggregate volatility.
منابع مشابه
Understanding the international great moderation∗
The majority of OECD countries has experienced a reduction in the volatility of output during the past two and a half decades. This period has also been characterized by a process of capital accounts liberalization among these countries. We study an open economy business cycle model with financial market frictions and show that the international liberalization of capital markets can lead to low...
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This paper was prepared for the November 2006 conference on " Financial Innovations and the Real Economy " sponsored by the Federal Reserve Bank of San Francisco. The views expressed in the paper are our own and not necessarily those of the Federal Reserve Board or other members of its staff. This draft is very preliminary and incomplete; it should not be quoted or cited.
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