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Financial Integration and Consumption Comovements in the Nordic Countries


  • Egil Matsen

    () (Department of Economics, Norwegian University of Science and Technology)

  • Øystein Thøgersen

    () (Deptartment of Economics, Norwegian School of Economics and Business Administration, and SNF, Norway.)


The cross-country correlations between annual per capita consumption growth in the Nordic countries (Denmark, Finland, Norway and Sweden) during the period 1973-1996 are much lower than predicted by the basic theory of international financial integration. Capturing that the consumption behavior of parts of the population may be myopic and that some external consumption risks may be uninsured, this paper attempts to shed light on this observation. We find some evidence of myopic consumption behavior in Denmark, Finland and Sweden. Taking this into account, the financial markets of the Nordic economies seem to be well integrated. It proves hard to identify uninsured external consumption risks at the aggregate level.

Suggested Citation

  • Egil Matsen & Øystein Thøgersen, 2000. "Financial Integration and Consumption Comovements in the Nordic Countries," Working Paper Series 1502, Department of Economics, Norwegian University of Science and Technology.
  • Handle: RePEc:nst:samfok:1502

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    References listed on IDEAS

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    Cited by:

    1. Özbilgin, H. Murat, 2010. "Financial market participation and the developing country business cycle," Journal of Development Economics, Elsevier, vol. 92(2), pages 125-137, July.
    2. Lindberg, Sara, 1999. "Consumption and Capital Mobility in the Nordic Countries," Working Paper Series 1999:6, Uppsala University, Department of Economics.

    More about this item


    International financial integration; international risk sharing; capital mobility;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth


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