Financial Globalization and Economic Policies

By M. Ayhan Kose, Eswar S. Prasad, Kenneth S. Rogoff, Shang-jin Wei. Social Science Research Network, 2009

203 citations recorded by the source corpus.

We review the large literature on various economic policies that could help developing economies effectively manage the process of financial globalization. Our central findings indicate that policies promoting financial sector development, institutional quality and trade openness appear to help developing countries derive the benefits of globalization. Similarly, sound macroeconomic policies are an important prerequisite for ensuring that financial integration is beneficial. However, our analysis also suggests that the relationship between financial integration and economic policies is a complex one and that there are unavoidable tensions inherent in evaluating the risks and benefits associated with financial globalization. In light of these tensions, structural and macroeconomic policies often need to be tailored to take into account country specific circumstances to improve the risk-benefit tradeoffs of financial integration. Ultimately, it is essential to see financial integration not just as an isolated policy goal but as part of a broader package of reforms and supportive macroeconomic policies.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/bc0619063668eec37985fca1dc23160581603c22

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Citations in the corpus

The Impact of the Global Financial Crisis on Banking Globalization (2014, background): “Kose et al. (2010) show that before the financial crisis, risk sharing typically increased somewhat for advanced countries—consistent with their greater levels of financial openness—but did not noticeably affect emerging market and developing countries.”
Financial Cycles: What? How? When? (2011, background): “Kose et al. (2010) survey the literature analyzing the impact of financial integration on the likelihood of crises. Frankel and Saravelos (2010) provide a detailed analysis on how various leading indicators help explain the cross-country incidence of the 2008–9 financial crisis. 23. These results ar”
Selection and Market Reallocation: Productivity Gains from Multinational Production (2012, unknown): “2See Harrison and Rodríguez-Clare (2011) and Kose et al. (2011) for recent overviews of the literature on the relationship between multinational production, productivity, and economic growth.”