Feng, Felix Zhiyu
[Verfasser:in]
;
Lu, Will Jianyu
[Sonstige Person, Familie und Körperschaft];
Zhu, Caroline
[Sonstige Person, Familie und Körperschaft]
Financial Integration, Savings Gluts, and Asset Price Booms
Anmerkungen:
In: The B.E. Journal of Theoretical Economics, Forthcoming
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 10, 2020 erstellt
Beschreibung:
Capital outflows after financial integration can lead to simultaneous increases in the national savings rate and asset prices in an economy with substantial financing costs. Under autarky, firms invest in risky capital while facing a borrowing constraint that creates a need for precautionary savings. Financial integration provides firms with access to foreign risk-free assets and results in two effects: a substitution effect, whereby firms divert some investments to foreign assets and cause capital outflows; and a wealth effect, whereby they grow richer in equilibrium and thus demand more domestic capital. Savings gluts and asset price booms occur when the wealth effect dominates