Are global imbalances due to financial underdevelopment in emerging economies?
This Economic Letter presents recent research on a new explanation for both the export of savings and the import of equity by emerging countries: their level of underdevelopment of the financial sector compared to that of more advanced countries. Specifically, financial underdevelopment in emerging markets can lead to both over saving by domestic agents and undervaluation of domestic firms, which encourages international investors to purchase equity there.
Volume (Year): (2008)
Issue (Month): apr11 ()
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- Enrique G. Mendoza & Vincenzo Quadrini & Jose-Victor Rios-Rull, 2007.
"Financial Integration, Financial Deepness and Global Imbalances,"
NBER Working Papers
12909, National Bureau of Economic Research, Inc.
- Mendoza, Enrique G & Quadrini, Vincenzo & Ríos-Rull, José-Víctor, 2007. "Financial Integration, Financial Deepness and Global Imbalances," CEPR Discussion Papers 6149, C.E.P.R. Discussion Papers.
- Enrique G. Mendoza, 2007. "Financial Integration, Financial Deepness and Global Imbalance," 2007 Meeting Papers 746, Society for Economic Dynamics.
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