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Title:The two-sided effect of financial globalization on output volatility PDF Logo
Authors:Meller, Barbara
Issue Date:2011
Series/Report no.:Discussion Paper Series 2: Banking and Financial Studies 2011,07
Abstract:This paper provides evidence for a significant relation between international financial markets' integration and output volatility. In the framework of a threshold model, it is shown empirically that this relation depends on country's financial risk. Financial risk indicates a country's ability to pay its official, commercial and trade debts. In countries with low financial risk, financial openness decreases output volatility, while, in countries with high financial risk, financial openness increases output volatility. Extensive robustness checks confirm this result.
Subjects:output volatility
financial openness
financial risk
JEL:E32
F36
F41
ISBN:978-3-86558-707-7
Document Type:Working Paper
Appears in Collections:Discussion Paper Series 2: Banking and Financial Studies, Deutsche Bundesbank

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