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Financial Openness and Business Cycle Volatility

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  • Claudia M. Buch
  • Jörg Döpke
  • Christian Pierdzioch

Abstract

This paper discusses whether the integration of international financial markets affects business cycle fluctuations. In the framework of a new open economy macro-model, we show that the link between financial openness and business cycle volatility depends on the nature of the underlying shock. Empirical evidence supports this conclusion. Our results also show that the link between business cycle volatility and financial openness has not been stable over time.

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File URL: https://www.ifw-members.ifw-kiel.de/publications/financial-openness-and-business-cycle-volatility/kap1121.pdf
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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1121.

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Length: 37 pages
Date of creation: Jul 2002
Date of revision:
Handle: RePEc:kie:kieliw:1121

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Keywords: Open Economy Macroeconomics; Monetary union; Business cycles; Financial markets;

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