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Financial Integration and Consumption Comovements in the Nordic Countries

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Author Info
Egil Matsen () (Department of Economics, Norwegian University of Science and Technology)
Øystein Thøgersen () (Deptartment of Economics, Norwegian School of Economics and Business Administration, and SNF, Norway.)

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Abstract

The cross-country correlations between annual per capita consumption growth in the Nordic countries (Denmark, Finland, Norway and Sweden) during the period 1973-1996 are much lower than predicted by the basic theory of international financial integration. Capturing that the consumption behavior of parts of the population may be myopic and that some external consumption risks may be uninsured, this paper attempts to shed light on this observation. We find some evidence of myopic consumption behavior in Denmark, Finland and Sweden. Taking this into account, the financial markets of the Nordic economies seem to be well integrated. It proves hard to identify uninsured external consumption risks at the aggregate level.

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Publisher Info
Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 1502.

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Length: 22 pages
Date of creation: 09 Oct 2000
Date of revision:
Handle: RePEc:nst:samfok:1502

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Related research
Keywords: International financial integration international risk sharing capital mobility

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Find related papers by JEL classification:
F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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  2. Maurice Obstfeld & Kenneth Rogoff, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Working Papers 7777, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Campbell, John Y. & Mankiw, N. Gregory, 1991. "The response of consumption to income : A cross-country investigation," European Economic Review, Elsevier, vol. 35(4), pages 723-756, May. [Downloadable!] (restricted)
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  5. Baxter, Marianne & Jermann, Urban J. & King, Robert G., 1998. "Nontraded goods, nontraded factors, and international non-diversification," Journal of International Economics, Elsevier, vol. 44(2), pages 211-229, April. [Downloadable!] (restricted)
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  6. Maurice Obstfeld, 1994. "Are Industrial-Country Consumption Risks Globally Diversified?," NBER Working Papers 4308, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Kenneth R. French & James M. Poterba, 1991. "Investor Diversification and International Equity Markets," NBER Working Papers 3609, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Tesar, Linda L., 1995. "Evaluating the gains from international risksharing," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 42(1), pages 95-143, June. [Downloadable!] (restricted)
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  10. Bayoumi, Tamim, 1994. "Consumption, Income, and International Capital Market Integration," CEPR Discussion Papers 1028, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Agell, Jonas & Berg, Lennart, 1996. " Does Financial Deregulation Cause a Consumption Boom?," Scandinavian Journal of Economics, Blackwell Publishing, vol. 98(4), pages 579-601, December.
  12. Maurice Obstfeld & Kenneth Rogoff, 1996. "The Intertemporal Approach to the Current Account," NBER Working Papers 4893, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Tesar, Linda L. & Werner, Ingrid M., 1995. "Home bias and high turnover," Journal of International Money and Finance, Elsevier, vol. 14(4), pages 467-492, August. [Downloadable!] (restricted)
  14. Thogersen, O., 1994. "Economic Policy, Macroeconomic Performance and the Norwegian Petroleum Wealth - A Survey," Papers 21-94, Norwegian School of Economics and Business Administration-.
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  16. Thogersen, Oystein, 1997. "International Diversification and Oil Price Risk," Applied Economics Letters, Taylor and Francis Journals, vol. 4(9), pages 587-90, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lindberg, Sara, 1999. "Consumption and Capital Mobility in the Nordic Countries," Working Paper Series 1999:6, Uppsala University, Department of Economics. [Downloadable!]
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