Macroeconomic Volatility after Trade and Capital Account Liberalization

Pancaro, Cosimo

关键词: ACCELERATOR;    ADVANCED COUNTRIES;    ADVANCED ECONOMIES;    ADVANCED ECONOMY;    ALLOCATION OF CAPITAL;   

DOI  :  10.1596/1813-9450-5441
RP-ID  :  WPS5441

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

What are the equilibrium effects oftrade and capital liberalization on consumption smoothing?This question is addressed by studying the response toproductivity shocks in a baseline two country, two goods,incomplete market model, where foreign borrowing is securedby collateral. The paper shows that international financialintegration, modeled by relaxing a borrowing constraint a laKiyotaki in the domestic country, worsens consumptionsmoothing; international trade integration, modeled by areduction of non linear iceberg transportation costs,improves it. As a measure of consumption smoothing, theanalysis uses the ratio between the simulated standarddeviation of consumption growth and the simulated standarddeviation of output growth. These results are qualitativelyconsistent with the empirical evidence provided by Kose,Prasad and Terrones (2003).