imprint:
Cambridge, Mass: National Bureau of Economic Research, March 1999
Published in:NBER working paper series ; no. w6994
Extent:
1 Online-Ressource
Language:
English
DOI:
10.3386/w6994
Identifier:
Reproduction note:
Hardcopy version available to institutional subscribers
Origination:
Footnote:
Mode of access: World Wide Web
System requirements: Adobe [Acrobat] Reader required for PDF files
Description:
In this article, we examine the effect of the imperfect mobility of goods on international risk sharing and, through that, on the investment in risky projects, welfare and growth. We find that the welfare gain of financial market openness is not monotonic with respect to investors' risk aversion and the aggregate volatility of output growth. Our main result is that the welfare gain from integration is not drastically reduced by the presence of goods market imperfections, modeled as a cost of transferring goods from one country to the other. Hence, financial market integration may be a worthwhile goal to pursue even at a time when full goods mobility has not been achieved