FINANCIAL INTEGRATION, GROWTH AND VOLATILITY

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

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Original languageEnglish
Pages (from-to)330-357
Journal / PublicationPacific Economic Review
Volume21
Issue number3
Early online date19 Aug 2016
Publication statusPublished - Aug 2016

Abstract

The aim of this paper is to evaluate the welfare gains from financial integration for developing and emerging market economies. To do so, we build a stochastic endogenous growth model for a small open economy that can: (i) borrow from the rest of the world; (ii) invest in foreign assets; and (iii) receive foreign direct investment. The model is calibrated on 46 emerging market and developing economies for which we evaluate the upper bound for the welfare gain from financial integration. For plausible values of preference parameters and actual levels of financial integration, the mean welfare gain from financial integration is around 13.5% of initial wealth. Compared with financial autarky, actual levels of financial integration translate into higher annual growth rates.

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Full text of this publication does not contain sufficient affiliation information. With consent from the author(s) concerned, the Research Unit(s) information for this record is based on the existing academic department affiliation of the author(s).

Citation Format(s)

FINANCIAL INTEGRATION, GROWTH AND VOLATILITY. / EPAULARD, ANNE; POMMERET, AUDE.

In: Pacific Economic Review, Vol. 21, No. 3, 08.2016, p. 330-357.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review