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Measures of financial openness and interdependence

Author

Listed:
  • William R. Clark
  • Mark Hallerberg
  • Manfred Keil
  • Thomas D. Willett

Abstract

Purpose - The purpose of this paper is to review concepts and measurements related to financial globalization such as financial openness, financial integration, monetary interdependence, and the mobility and movement of capital. Design/methodology/approach - This paper surveys the theoretical and empirical literature on monetary interdependence and financial globalization. The major ways in which these concepts are measured empirically are presented and critiqued. Findings - Disagreements about the degree of financial integration and capital mobility are, in part, explained by the different approaches to measuring these concepts. One major challenge in obtaining a good measures is controlling for other major factors that may influence observed correlations among financial variables. While these relationships still cannot be estimated precisely, it can be safely said that while high for many countries, few if any financial markets are perfectly integrated across countries. Originality/value - By offering a comprehensive analysis of these different measurements, the paper underscores the different implications for national policies and the operation of the international monetary system of different dimensions of globalization. In particular, the proposition that financial globalization has left most countries with little autonomy for domestic monetary policy is subject to serious debate, at least in the short run.

Suggested Citation

  • William R. Clark & Mark Hallerberg & Manfred Keil & Thomas D. Willett, 2012. "Measures of financial openness and interdependence," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 4(1), pages 58-75, April.
  • Handle: RePEc:eme:jfeppp:v:4:y:2012:i:1:p:58-75
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Levan Efremidze & John Rutledge & Thomas D. Willett, 2016. "Capital Flow Surges As Bubbles: Behavioral Finance And Mckinnon’S Over-Borrowing Syndrome Extended," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(02), pages 1-27, June.
    2. Shijaku, Gerti, 2013. "The probability of sudden stop of capital flows - the case of Albania," MPRA Paper 79138, University Library of Munich, Germany.
    3. repec:wsi:jicepx:v:08:y:2017:i:01:n:s1793993317500041 is not listed on IDEAS
    4. Xiangsheng Dou & Xiangsheng Dou, 2016. "Measure and Evaluation of Financial Openness in China," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 985-994.
    5. Puspa D. Amri & Greg M. Richey & Thomas D. Willett, 2016. "Capital Surges and Credit Booms: How Tight is the Relationship?," Open Economies Review, Springer, vol. 27(4), pages 637-670, September.

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