Publication

This paper tests the assumption that international financial integration can have important implications for the propagation of, e.g., macroeconomic policy shocks in an open economy. The authors examine this question using data for the G7 countries and find that the degree of financial integration is invariant to the determinants of the business-cycle fluctuations. They find, however, a few exceptions from this rule and hold that shocks tend to have a highly persistent effect on financial regulation.