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Financial openness and business cycle volatility

  • Buch, Claudia M.
  • Doepke, Joerg
  • Pierdzioch, Christian

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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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 24 (2005)
Issue (Month): 5 (September)
Pages: 744-765

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Handle: RePEc:eee:jimfin:v:24:y:2005:i:5:p:744-765
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