Paper #1128

Títol:

Rethinking the effects of financial globalization

Autors:

Fernando Broner i Jaume Ventura

Data:

Octubre 2010

Resum:

During the last few decades, many emerging markets lifted restrictions on cross-border financial transactions. In this paper, we present a simple model that can account for the observed effects of financial globalization. The model emphasizes the role of imperfect enforcement of domestic debts and the interactions between domestic and foreign debts. Financial globalization can lead to a variety of outcomes: (i) domestic capital flight and ambiguous effects on net capital flows, investment, and growth; (ii) capital inflows and higher investment and growth; or (iii) volatile capital flows and unstable domestic financial markets. The model shows how the effects of financial globalization depend on the level of development, productivity, domestic savings, and the quality of institutions.

Paraules clau:

financial globalization, sovereign risk, enforcement, capital flows, economic growth.

Codis JEL:

F34, F36, F43, G15, O19, O43.

Àrea de Recerca:

Macroeconomia i Economia Internacional

Publicat a:

Quarterly Journal of Economics, 131 (3), 1497-1542, 2016

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