Rethinking the Effects of Financial Globalization

By Fernando A. Broner, Jaume Ventura. 2016

114 citations recorded by the source corpus.

During the past three decades, many countries have lifted restrictions on cross-border financial transactions. We present a simple model that can account for the observed effects of financial globalization. The model emphasizes the role of imperfect enforcement of domestic debts and the interactions between domestic and foreign debts. Financial globalization can lead to a variety of outcomes: (i) domestic capital flight and ambiguous effects on net capital flows, investment, and growth; (ii) capital inflows and higher investment and growth; or (iii) volatile capital flows and unstable domestic financial markets. The model shows how the effects of financial globalization depend on the level of development, productivity, domestic savings, and the quality of institutions. JEL Codes: F34, F36, F43, G15, O19, O43.

Subfields: Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/1dd9032e9a4c472332090f9f4d82c2642b399157

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Citations in the corpus

The Volatility of Capital Flows in Emerging Markets: Measures and Determinants (2017, background): “5 For instance, Broner and Ventura (2016) point out that financial globalization has sometimes led to capital flows that are volatile and procyclical. flows and economic growth (see Easterly, Islam, and Stiglitz 2001 and Ramey and Ramey 1995), maintaining a steady stream of capital flows is a…”
Populism and the economics of globalization (2018, background): “A recent paper by Broner & Ventura (2016) captures well the mainstream perspective on the anomalous consequences of financial globalization.”