Fostel, Ana
[Verfasser:in]
;
Geanakoplos, John
[Sonstige Person, Familie und Körperschaft];
Phelan, Gregory
[Sonstige Person, Familie und Körperschaft]
Erschienen in:Cowles Foundation Discussion Paper ; No. 2169 (2019)
Umfang:
1 Online-Ressource (41 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.3342860
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 27, 2019 erstellt
Beschreibung:
Cross-border financial flows arise when (otherwise identical) countries differ in their abilities to use assets as collateral to back financial contracts. Financially integrated countries have access to the same set of financial instruments, and yet there is no price convergence of assets with identical payoffs, due to a gap in collateral values. Home (financially advanced) runs a current account deficit. Financial flows amplify asset price volatility in both countries, and gross flows driven by collateral differences collapse following bad news about fundamentals. Our results can explain financial flows among rich, similarly-developed countries, and why these flows increase volatility