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International Business Cycle and Financial Intermediation

Author

Listed:
  • Max Gillman
  • Tamas Csabafi
  • Ruthira Naraidoo

Abstract

The paper extends a standard two-country international real business cycle model to include financial intermediation by banks of loans and government bonds. The paper contributes an explanation for both the US relative to the Euro-area, and the US relative to China, of cross-country correlations of loan rates, deposit rates, and the loan premia. It shows a type of financial retrenchment for the US relative to both Europe and China following a negative bank productivity shock, such as during the 2008 crisis. After 2008, results suggest the Euro-area has been more financially integrated with the US, and China less financially integrated.

Suggested Citation

  • Max Gillman & Tamas Csabafi & Ruthira Naraidoo, 2018. "International Business Cycle and Financial Intermediation," CEU Working Papers 2018_7, Department of Economics, Central European University.
    • Handle: RePEc:ceu:econwp:2018_7
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. International Business Cycle and Financial Intermediation
      by Christian Zimmermann in NEP-DGE blog on 2017-01-17 22:06:21

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    Cited by:

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    2. Max Gillman, 2021. "Macroeconomic Trends among Visegrád Countries, EU Balkans, and the U.S., 1991-2021," Central European Business Review, Prague University of Economics and Business, vol. 2021(2), pages 1-20.
    3. Schuler, Tobias & Sun, Yiqiao, 2022. "The current account and monetary policy in the euro area," Working Paper Series 2696, European Central Bank.
    4. Chatterjee, Ujjal & French, Joseph J. & Gurdgiev, Constantin & Borochin, Paul, 2024. "Financial intermediation and informational efficiency: Predicting business cycles," International Review of Economics & Finance, Elsevier, vol. 96(PB).

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    More about this item

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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