The Macroeconomic Effects of World Trade in Financial Assets

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Creator Series Issue number
  • Vol. 17, No. 3
Date created
  • 1993 Summer
Abstract

  • This article analyzes some of the potential effects of increased international financial integration within a simple two-country model. In the model, the article considers a switch in the menu of internationally traded financial securities from bonds to complete contingent claims and examines the impact of this switch on the stochastic properties, including the cross-country correlations, of standard macroeconomic aggregates like output, consumption, and labor effort, as well as the trade balance.

Related information

  • This is a revised version of a paper published in the International Economic Review (May 1988, vol. 29, no. 2, pp. 237-59): "Financial Structure and International Trade" by Harold Cole. The article appears here with the permission of the University of Pennsylvania. © All rights reserved. https://doi.org/10.2307/2526664

Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
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