TY - JOUR
T1 - Financial integration, financial development, and global imbalances
AU - Mendoza, Enrique G.
AU - Quadrini, Vincenzo
AU - Ríos-Rull, José Víctor
PY - 2009/6
Y1 - 2009/6
N2 - Global financial imbalances can result from financial integration when countries differ in financial markets development. Countries with more advanced financial markets accumulate foreign liabilities in a gradual, long-lasting process. Differences in financial development also affect the composition of foreign portfolios: countries with negative net foreign asset positions maintain positive net holdings of nondiversifiable equity and foreign direct investment. Three observations motivate our analysis: (1) financial development varies widely even among industrial countries, with the United States on top; (2) the secular decline in the U.S. net foreign asset position started in the early 1980s, together with a gradual process of international financial integration; (3) the portfolio composition of U.S. net foreign assets features increased holdings of risky assets and a large increase in debt.
AB - Global financial imbalances can result from financial integration when countries differ in financial markets development. Countries with more advanced financial markets accumulate foreign liabilities in a gradual, long-lasting process. Differences in financial development also affect the composition of foreign portfolios: countries with negative net foreign asset positions maintain positive net holdings of nondiversifiable equity and foreign direct investment. Three observations motivate our analysis: (1) financial development varies widely even among industrial countries, with the United States on top; (2) the secular decline in the U.S. net foreign asset position started in the early 1980s, together with a gradual process of international financial integration; (3) the portfolio composition of U.S. net foreign assets features increased holdings of risky assets and a large increase in debt.
UR - http://www.scopus.com/inward/record.url?scp=69249154220&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=69249154220&partnerID=8YFLogxK
U2 - 10.1086/599706
DO - 10.1086/599706
M3 - Article
AN - SCOPUS:69249154220
SN - 0022-3808
VL - 117
SP - 371
EP - 416
JO - Journal of Political Economy
JF - Journal of Political Economy
IS - 3
ER -