Although a lot of the empirical research have studied the relationship between changes of oil price and economic activity, it is surprising that little research has been conducted on the relationship between oil price shocks and the Greater China region (China, Hong Kong, and Taiwan). Therefore, the main goal of this paper is to apply a detail monthly data from 1997/7 to 2008/9 to fill up this ...

In the data country portfolios are heavily biased toward domestic assets. Standard onegood international macro models predict that, due to the presence of non-diversifiable labor income risk, country portfolios should be heavily biased toward foreign assets; this discrepancy constitutes the international diversification puzzle (Baxter and Jermann, 1997). We show that a simple extension of one-g...

a r t i c l e i n f o JEL classification: E32 F36 G15 Keywords: Financial openness Business cycle asymmetry Development This paper provides evidence that financial openness is an important determinant of growth rate asymmetry in emerging markets. I exploit exogenous shocks to financial flows and examine the impact of equity market liberalization on the skewness of output growth for 93 countries...

Recent sovereign default episodes have been associated with substantial output costs. In this paper, we construct a parsimonious …nite horizon model which captures two key market imperfections: (i) the government’s inability to commit to repay debt; (ii) liquidity constraints in the domestic …nancial sector. We use the model to answer two sets of questions. First, we characterize the optimal so...

a r t i c l e i n f o JEL classification: F36 F44 F62 G15 Keywords: Financial integration International risk sharing Portfolio choice Market size Welfare analysis Does opening up capital markets facilitate risk diversification across borders? Are all countries gradually better off in the process of international financial integration? This paper explores welfare implications for various countri...

As financial institutions and markets transact more and more cross-border business, gaps and flaws in national safety nets become more consequential. Because citizens of host (home) countries may be made to pay for mistakes made in the home (host) country, Basel’s lead-regulator paradigm violates the principle of democratic accountability. Because important differences exist in policymaking aut...

This paper constructs a two-country overlapping generations model with two distinct fiat monies in which seigniorage revenues are used to finance a local public good. Countries differ both in endowments and in the preference for the public good. Under perfect mobility of financial assets benevolent governments choose their rates of growth of money supply strategically and private individuals ha...