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Financial Globalization, Capital Account Liberalization and International Consumption Risk-Sharing

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This paper analyzes whether international risk-sharing has improved along the same lines as the process of financial globalization. International financial markets allow investors to efficiently diversify their risks. Agents can protect themselves against fluctuations in their incomes through trading in assets with appropriate payoff structures. However, the usual finding in the literature is that international risk-sharing is quite limited. We argue that despite the liberalization of capital accounts and the removal of various legal barriers to capital mobility, international risk-sharing still appears to be rather limited.

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  • Gabriel Moser & Wolfgang Pointner, 2005. "Financial Globalization, Capital Account Liberalization and International Consumption Risk-Sharing," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 98-106.
    • Handle: RePEc:onb:oenbfi:y:2005:i:1:b:3
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    1. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
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