International financial integration helps to diversify risk but also may increase the transmission of crises across countries. We provide a quantitative analysis of this trade-off in a two-country general equilibrium model with endogenous portfolio choice and collateral constraints. Collateral constraints bind occasionally, depending upon the state of the economy and levels of inherited debt. T...

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...

We formulate and solve a range of dynamic models of constrained credit/insurance that allow for moral hazard, limited commitment and unobservable investment. We compare them to full insurance and exogenously incomplete financial regimes (autarky, saving only, and borrowing and lending in a risk-free asset). We develop computational methods based on mechanism design, linear programming, and maxi...

We develop a two-country overlapping-generations model with domestic financial frictions and show that cross-country differences in financial development explain three recent patterns of international capital flows. In our model, domestic financial frictions distort the interest rates and production efficiency in the less financially developed country. Capital flows not only lead to cross-count...

Dilip Mookherjee, Debraj Ray and Kunal Sengupta are thankfully acknowledged. 2 Abstract: The purpose of this paper is to examine the impact of financial intermediation on precautionary savings and incentives to invest in a setting where the credit market is subject to informational asymmetry due to moral hazard. We show that precautionary savings are the outcome of financial contracts that offe...

Photovoltaic (PV) system adoption in Germany is mainly driven by a feed-in tariff that guarantees a financial return on investment. To promote adoption in the future absence of this tariff, we explored further motives of homeowners relevant to PV system purchase intention. A sample of 200 homeowners who did not own a PV system participated in an online-survey. Only few homeowners actually plann...

The representative-agent Lucas model stresses aggregate risk and hence does not allow us to study the impact of agents’ heterogeneity on the dynamics of equilibrium trading volume. In this paper, we investigate under what conditions non-informational heterogeneity, i.e., differences in preferences and endowments, leads to nontrivial trading volume in equilibrium. We present a non-informational ...

We develop a tractable two-country overlapping-generations model with domestic financial frictions and show that cross-country differences in financial development explain three recent empirical patterns of international capital flows. In our model, domestic financial frictions create two distinct distortions on the interest rates and production efficiency in the less financially developed coun...

Abstract This dispatch examines contemporary activist movements in Angola and their political utopias, namely relevance to citizenship governance, increasing importance the landscape. The authors describe civic mobilization toward implementation of a municipal electoral system (autarquia) argue that it poses an Afro-utopian challenge: issue autarky, or recognition self-organization self-suffici...