Financial Integration, Globalization, and Real Activity

40 Pages Posted: 21 Feb 2012

See all articles by Gianni De Nicolo

Gianni De Nicolo

Johns Hopkins University - Carey Business School; CESifo (Center for Economic Studies and Ifo Institute)

Luciana Juvenal

Federal Reserve Bank of Saint Louis

Date Written: February 21, 2012

Abstract

Using data for a large number of advanced and emerging market economies during 1982-2009, this paper examines the distinct impact of financial integration and globalization on several dimensions of real activity. We find that: financial integration has progressed significantly worldwide, particularly in emerging markets, as well as within regions; advances in financial integration predict better growth prospects; both advances in financial integration and globalization are associated with higher growth, lower growth volatility, and lower probabilities of severe declines in real activity. Advances in financial integration and globalization indeed foster countries’ growth, and there appears to be no trade-off between these advances and macroeconomic stability.

Keywords: financial integration, globalization, real activity

JEL Classification: F360, G150

Suggested Citation

De Nicolo, Gianni and Juvenal, Luciana, Financial Integration, Globalization, and Real Activity (February 21, 2012). CESifo Working Paper Series No. 3737. Available at SSRN: https://ssrn.com/abstract=2008612

Gianni De Nicolo (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States
(410) 234-4507 (Phone)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Luciana Juvenal

Federal Reserve Bank of Saint Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

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