Working Paper: NBER ID: w16630
Authors: Anna Pavlova; Roberto Rigobon
Abstract: International macro-finance is a new area of open economy macroeconomics that brings portfolio choice and asset pricing considerations into models of international macroeconomics. The importance of these considerations--typically relegated to Finance and largely overlooked in traditional macroeconomics--for the international macroeconomy have been underscored by a series of recent financial crises and by unprecedented global imbalances. In this paper, we survey recent developments in this area, primarily on the theoretical front. We also suggest several promising directions for future research.
Keywords: No keywords provided
JEL Codes: F31; F36; G12; G15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial market dynamics (G19) | macroeconomic outcomes (E66) |
| shocks propagate through financial markets (E44) | impact asset values (G19) |
| financial crises (G01) | impact economic stability (F69) |
| rise in external deficits (F32) | increase in cross-border risky asset holdings (F65) |
| valuation effects (Q51) | impact current account sustainability (F32) |
| market incompleteness and institutional frictions (D52) | understanding contagion and systemic risk (E44) |