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Financial frictions, financial integration and the international propagation of shocks

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  • Luca Dedola
  • Giovanni Lombardo

Abstract

risky assets, if asset markets are integrated across the board, reflecting a strong pressure towards the cross-border equalization of external finance premia faced by levered investors. In turn, the resulting global flight to quality may bring about tight international linkages in (de-)leveraging, financial and macroeconomic dynamics.
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Suggested Citation

  • Luca Dedola & Giovanni Lombardo, 2012. "Financial frictions, financial integration and the international propagation of shocks," Economic Policy, CEPR;CES;MSH, vol. 27(70), pages 319-359, April.
  • Handle: RePEc:bla:ecpoli:v:27:y:2012:i:70:p:319-359
    DOI: j.1468-0327.2012.00286.x
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    JEL classification:

    • G0 - Financial Economics - - General

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