Working Paper
Financial Market Integration and Business Cycle Volatility in a Monetary Union
Kiel Working Papers, 1115
Authors
Publication Date
JEL Classification
F33
F36
F41
Key Words
This paper uses a dynamic general equilibrium two-country optimizing sticky-price model to analyze the consequences of international financial market integration for the propagation of asymmetric productivity shocks in a monetary union. The model implies that business cycle volatility is higher the more integrated the capital markets of the member countries of the monetary union are.
