Working Paper

Consumption Volatility and Financial Openness


  • Buch
  • C.M.
  • Yener
  • S.
Publication Date

Economic theory predicts that the integration of financial markets lowers the volatility of consumption. In this paper, we study long-term trends in the consumption volatility of the G7 countries. Using different measures of financial openness, we find some evidence that greater financial openness has been associated with lower consumption volatility. However, volatility of consumption relative to output has not declined.


JEL Classification
F36, F41

Key Words

  • Consumption volatility
  • Financial integration
  • G7 countries