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International Business Cycle and Financial Intermediation

Author

Listed:
  • Tamas Csabafi

    (University of Missouri-St. Louis - Department of Economics)

  • Max Gillman

    (University of Missouri-St. Louis; IEHAS, Budapest; CERGE-EI, Prague)

  • Ruthira Naraidoo

    (Department of Economics - University of Pretoria, South Africa)

Abstract
The paper extends a standard two-country international real business cycle model to include financial intermediation by banks of loans and government bonds. Taking in household deposits from home and abroad, the loans are produced by the bank in a Cobb-Douglas production approach such that a bank productivity shock can explain financial data moments. The paper contributes an explanation, for both the US relative to the Euro-area, and the US relative to China, of cross-country correlations of loan rates, deposit rates, and the loan premia. It provides a sense in which financial retrenchment resulted in the US following the 2008 bank crisis, and how the Euro-area and China reacted. The paper contributes evidence of how the Euro-area has been more financially integrated with the US, and China less financially integrated, with the Euro-area becoming more financially integrated after the 2008 crisis, and China becoming less so integrated.

Suggested Citation

  • Tamas Csabafi & Max Gillman & Ruthira Naraidoo, 2018. "International Business Cycle and Financial Intermediation," CERS-IE WORKING PAPERS 1830, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1830
    as

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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. International Business Cycle and Financial Intermediation
      by Christian Zimmermann in NEP-DGE blog on 2017-01-17 22:06:21

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    Cited by:

    1. Schuler, Tobias & Sun, Yiqiao, 2022. "The current account and monetary policy in the euro area," Working Paper Series 2696, European Central Bank.
    2. Daniel Francois Meyer & Lerato Mothibi, 2021. "The Effect of Risk Rating Agencies Decisions on Economic Growth and Investment in a Developing Country: The Case of South Africa," JRFM, MDPI, vol. 14(7), pages 1-17, June.
    3. Max Gillman, 2021. "Macroeconomic Trends among Visegrád Countries, EU Balkans, and the U.S., 1991-2021," Central European Business Review, Prague University of Economics and Business, vol. 2021(2), pages 1-20.

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    More about this item

    Keywords

    International Real Business Cycles; Financial Intermediation; Credit Spread; Bank Productivity; 2008 Crisis;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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