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International financial remoteness and macroeconomic volatility

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  • Rose, Andrew K.
  • Spiegel, Mark M.

Abstract

This paper shows that proximity to major international financial centers seems to reduce business cycle volatility. In particular, we show that countries that are farther from major locations of international financial activity systematically experience more volatile growth rates in both output and consumption, even after accounting for political institutions, trade, and other controls. Our results are relatively robust in the sense that more financially remote countries are more volatile, though the results are not always statistically significant. The comparative strength of this finding is in contrast to the more ambiguous evidence found in the literature.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 89 (2009)
Issue (Month): 2 (July)
Pages: 250-257

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Handle: RePEc:eee:deveco:v:89:y:2009:i:2:p:250-257

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Web page: http://www.elsevier.com/locate/devec

Related research

Keywords: Empirical Data Cross-section Business cycle Capital Distance Proximity;

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References

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