International propagation of financial shocks in a search and matching environment

Marlene Isore

    Forskningsoutput: ArbetsdokumentDiskussionsartiklarVetenskaplig

    Sammanfattning

    This paper develops a two-country model in which transmission of financial shocks arises despite a flexible exchange rate regime and substitutable financial assets, contrary to the open-economy literature results under these two conditions. The search and matching approach first accounts for the time needed to restore normal functioning of financial markets following a disruption. It also allows dissociating two types of financial shocks: (i) pure liquidity contractions imply negative co-movements of home and foreign outputs, so that the model nests the standard open macroeconomy results as a particular case; (ii) shocks to banks’ capitalization costs in one country do generate international financial contagion.
    Originalspråkengelska
    UtgivningsortHelsinki
    UtgivareBank of Finland
    Antal sidor52
    ISBN (elektroniskt)978-952-323-135-1
    StatusPublicerad - 2016
    MoE-publikationstypD4 Publicerad utvecklings- eller forskningsrapport eller studie

    Vetenskapsgrenar

    • 511 Nationalekonomi

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