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How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?

Listed author(s):
  • Saif Al-Abri, Almukhtar

This paper presents empirical evidence suggesting that the volatility, trend-growth, and shock-duration of terms-of-trade (TOT) are important drivers of the degree and composition of international financial integration (IFI). Our results are based on a panel of 55 primary-commodity exporting countries during 1980–2007. The findings reveal that TOT trend-growth has larger impact on IFI compared to TOT volatility. Also, higher TOT volatility is robustly associated with greater cross-holdings of foreign assets and lower cross-holdings of foreign liabilities. Another notable finding is that longer duration of TOT shocks seems to shift IFI towards equity assets.

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File URL: http://www.sciencedirect.com/science/article/pii/S1042443114001139
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Article provided by Elsevier in its journal Journal of International Financial Markets, Institutions and Money.

Volume (Year): 33 (2014)
Issue (Month): C ()
Pages: 335-353

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Handle: RePEc:eee:intfin:v:33:y:2014:i:c:p:335-353
DOI: 10.1016/j.intfin.2014.09.002
Contact details of provider: Web page: http://www.elsevier.com/locate/intfin

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