Financial Globalization and Animal Spirits
AbstractUsing a multi-country general equilibrium model, we demonstrate that when agents face credit constraints in an international financial market, rational expectations, which are ex-post heterogeneous between countries, cause business fluctuations. If the international financial market becomes perfect, only a unique perfect foresight equilibrium is obtained, implying that no business fluctuations appear.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 36123.
Date of creation: 22 Jan 2012
Date of revision:
Business fluctuations; Financial globalization; Sunspots; Heterogeneous agents; Rational expectations;
Find related papers by JEL classification:
- F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-08 (All new papers)
- NEP-CBA-2012-02-08 (Central Banking)
- NEP-OPM-2012-02-08 (Open Economy Macroeconomics)
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