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How Does Financial Globalization Affect Risk Sharing? Patterns and Channels

2009
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Release : 2009
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Book Synopsis How Does Financial Globalization Affect Risk Sharing? Patterns and Channels by : M. Ayhan Kose

Download or read book How Does Financial Globalization Affect Risk Sharing? Patterns and Channels written by M. Ayhan Kose. This book was released on 2009. Available in PDF, EPUB and Kindle. Book excerpt: In theory, one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing. This paper provides a comprehensive empirical evaluation of the patterns of risk sharing among different groups of countries and examines how international financial integration has affected the evolution of these patterns. Using a variety of empirical techniques, we conclude that there is at best a modest degree of international risk sharing, and certainly nowhere near the levels predicted by theory. In addition, only industrial countries have attained better risk sharing outcomes during the recent period of globalization. Developing countries have, by and large, been shut out of this benefit. The most interesting result is that even emerging market economies, which have experienced large increases in cross-border capital flows, have seen little change in their ability to share risk. We find that the composition of flows may help explain why emerging markets have not been able to realize this presumed benefit of financial globalization. In particular, our results suggest that portfolio debt, which has dominated the external liability stocks of most emerging markets until recently, is not conducive to risk sharing.

How Does Financial Globalization Affect Risk Sharing? Patterns and Channels

2007-10 Business & Economics
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Release : 2007-10
Genre : Business & Economics
Kind : eBook
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Book Synopsis How Does Financial Globalization Affect Risk Sharing? Patterns and Channels by : M. Ayhan Kose

Download or read book How Does Financial Globalization Affect Risk Sharing? Patterns and Channels written by M. Ayhan Kose. This book was released on 2007-10. Available in PDF, EPUB and Kindle. Book excerpt: In theory, one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing. This paper provides a comprehensive empirical evaluation of the patterns of risk sharing among different groups of countries and examines how international financial integration has affected the evolution of these patterns. Using a variety of empirical techniques, we conclude that there is at best a modest degree of international risk sharing, and certainly nowhere near the levels predicted by theory. In addition, only industrial countries have attained better risk sharing outcomes during the recent period of globalization. Developing countries have, by and large, been shut out of this benefit. The most interesting result is that even emerging market economies, which have experienced large increases in cross-border capital flows, have seen little change in their ability to share risk. We find that the composition of flows may help explain why emerging markets have not been able to realize this presumed benefit of financial globalization. In particular, our results suggest that portfolio debt, which has dominated the external liability stocks of most emerging markets until recently, is not conducive to risk sharing.

Financial Globalization, Portfolio Diversification, and the Pattern of International Trade

2003-12-01 Business & Economics
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Release : 2003-12-01
Genre : Business & Economics
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Book Rating : 614/5 ( reviews)

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Book Synopsis Financial Globalization, Portfolio Diversification, and the Pattern of International Trade by : Miklós Koren

Download or read book Financial Globalization, Portfolio Diversification, and the Pattern of International Trade written by Miklós Koren. This book was released on 2003-12-01. Available in PDF, EPUB and Kindle. Book excerpt: The paper provides a general-equilibrium model where incomplete international financial markets lead to insufficient industrial specialization and low international trade. As international portfolio diversification is limited and productivity is uncertain, investors wish to maintain a diversified industrial structure rather than specializing according to their comparative advantage. Financial globalization then induces more specialization and more trade. The present framework yields explicit closed-form solutions for the volume and the structure of trade. Empirical results support the implications of the theory. Trade in financially open countries is (i) higher, (ii) more dependent on productivity differences, and (iii) less sensitive to industry risks.

The Home Bias and Capital Income Flows Between Countries and Regions

2011
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Release : 2011
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Book Synopsis The Home Bias and Capital Income Flows Between Countries and Regions by : Michael J. Artis

Download or read book The Home Bias and Capital Income Flows Between Countries and Regions written by Michael J. Artis. This book was released on 2011. Available in PDF, EPUB and Kindle. Book excerpt: This paper documents a marked increase in international consumption risk sharing throughout the recent globalization period. Unlike earlier studies that have found it difficult to document a consistent effect of financial globalization on international consumption comovements, we make use of the information implicit in the relative levels of consumption and output to measure long-run risk sharing among OECD countries and US federal states.We derive our empirical setup from a deliberately simplistic model in which countries can trade perpetual claims to each other's output (Shiller securities). Our framework allows us to distinguish between two channels of risk sharing: ex ante diversification that leads to income smoothing through capital income flows and ex-post consumption smoothing through savings and dissavings. The model successfully replicates the patterns of income and consumption smoothing observed in both U.S. state-level and international data. The increase in international consumption risk sharing is closely associated with the decline in international portfolio home bias. While capital income flows remain relatively limited as a channel of risk sharing at business cycle frequencies, we find that better international portfolio diversification has led to a considerable increase in capital income flows at medium and long horizons.

Globalization and Poverty

2007-11-01 Business & Economics
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Release : 2007-11-01
Genre : Business & Economics
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Book Rating : 001/5 ( reviews)

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Book Synopsis Globalization and Poverty by : Ann Harrison

Download or read book Globalization and Poverty written by Ann Harrison. This book was released on 2007-11-01. Available in PDF, EPUB and Kindle. Book excerpt: Over the past two decades, the percentage of the world’s population living on less than a dollar a day has been cut in half. How much of that improvement is because of—or in spite of—globalization? While anti-globalization activists mount loud critiques and the media report breathlessly on globalization’s perils and promises, economists have largely remained silent, in part because of an entrenched institutional divide between those who study poverty and those who study trade and finance. Globalization and Poverty bridges that gap, bringing together experts on both international trade and poverty to provide a detailed view of the effects of globalization on the poor in developing nations, answering such questions as: Do lower import tariffs improve the lives of the poor? Has increased financial integration led to more or less poverty? How have the poor fared during various currency crises? Does food aid hurt or help the poor? Poverty, the contributors show here, has been used as a popular and convenient catchphrase by parties on both sides of the globalization debate to further their respective arguments. Globalization and Poverty provides the more nuanced understanding necessary to move that debate beyond the slogans.

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