NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Real-Financial Linkages Among Open Economies

Sven W. Arndt, J. David Richardson

NBER Working Paper No. 2230 (Also Reprint No. r1050)
Issued in May 1987
NBER Program(s):   ITI   IFM

This paper integrates the contributions to a forthcoming volume of the same title by the authors. The volume analyzes and empirically examines linkages between the real and financial variables that themselves link open economies-- "linkage" thus has a double meaning. Two types of linkages are discussed. Structural linkages describe differences across economies and among sectors in market structure (competitive/oligopolistic), productivity growth, and openness to trade. Inter-temporal linkages describe differences across economies and over time or circumstance in saving preferences and capital formation, government budgets, portfolio shares of "inside" and "outside" assets, and openness to mobile financial flows. Structural linkages are important chiefly for explaining sustained divergences in national competitiveness as measured by purchasing-power-parity norms. Inter-temporal linkages also account for them, as well as for sustained divergences in current and capital-account positions, geographical growth rates, and national incomes of residents.

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Document Object Identifier (DOI): 10.3386/w2230

Published: "Real-Financial Linkages Among Open Economies: An Overview" From Real-Financial Linkages Among Open Economies, edited by Sven W. Arndt and J. David Richardson, pp. 5-32. Cambridge, MA: MIT Press, 1987.

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