Evaluating international financial integration in a center-periphery economy

• 成果类型: Article
• 署名作者: Yu, Changhua
• 署名单位: University of International Business & Economics
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2014.10.008
• 发表日期: 2015
• 页码: 129-144
• 关键词: financial integration; International risk sharing; portfolio choice; Market size; welfare analysis

摘要

Does opening up capital markets facilitate risk diversification across borders? Are all countries gradually better off in the process of international financial integration? This paper explores welfare implications for various countries in a center-periphery framework with endogenous portfolio choice. Financial integration is divided into four stages: financial autarky, two-country integration, center-periphery integration and global integration. Two effects from financial integration emerge: diversification effects and financial terms of trade effects. Results show that financial integration between the center and a new periphery in center-periphery integration generates welfare losses for the peripheral country already integrated and welfare gains for the central country. Allowing for financial integration between peripheries in global integration leads the welfare in the center to deteriorate. From two-country integration directly to global integration, the large country gains, while the small one loses. (C) 2014 Elsevier B.V. All rights reserved.