Working Paper

Financial Market Integration and Business Cycle Volatility in a Monetary Union


  • Pierdzioch
  • C.
Publication Date

This paper uses a dynamic general equilibrium two-country optimizing sticky-price model to analyze the consequences of international financial market integration for the propagation of asymmetric productivity shocks in a monetary union. The model implies that business cycle volatility is higher the more integrated the capital markets of the member countries of the monetary union are.


JEL Classification
F33, F36, F41

Key Words

  • Business cycles
  • financial markets
  • Finanzmärkte
  • Konjunkturzyklen
  • Monetary union
  • Open economy macroeconomics