International Financial Remoteness and Macroeconomic Volatility
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NBER Working Paper No. 14336
Issued in September 2008
NBER Program(s): IFM
This paper shows that proximity to major international financial centers seems to reduce business cycle volatility. In particular, we show that countries that are further from major locations of international financial activity systematically experience more volatile growth rates in both output and consumption, even after accounting for political institutions, trade, and other controls. Our results are relatively robust in the sense that more financially remote countries are more volatile, though the results are not always statistically significant. The comparative strength of this finding is in contrast to the more ambiguous evidence found in the literature.
Published: Rose, Andrew K. & Spiegel, Mark M., 2009.
"International financial remoteness and macroeconomic volatility,"
Journal of Development Economics,
Elsevier, vol. 89(2), pages 250-257, July.
This paper is available as PDF (150 K) or via email.
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