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Financial Integration, Globalization, and Real Activity

  • Gianni De Nicolò
  • Luciana Juvenal

Using data for a large number of advanced and emerging market economies during 1982-2009, this paper examines the distinct impact of financial integration and globalization on several dimensions of real activity. We find that: (a) financial integration has progressed significantly worldwide, particularly in emerging markets, as well as within regions; (b) advances in financial integration predict better growth prospects; (c) both advances in financial integration and globalization are associated with higher growth, lower growth volatility, and lower probabilities of severe declines in real activity. Advances in financial integration and globalization indeed foster countries’ growth, and there appears to be no trade-off between these advances and macroeconomic stability.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-02/cesifo1_wp3737.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3737.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3737
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