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International financial remoteness and macroeconomic volatility

Author

Listed:
  • Andrew K. Rose
  • Mark M. Spiegel
Abstract
This paper shows that proximity to major international financial centers seems to reduce business cycle volatility. In particular, we show that countries that are further from major locations of international financial activity systematically experience more volatile growth rates in both output and consumption, even after accounting for domestic financial depth, political institutions, and other controls. Our results are relatively robust in the sense that more financially remote countries are more volatile, though the results are not always statistically significant. The comparative strength of this finding is in contrast to the more ambiguous evidence found in the literature.

Suggested Citation

  • Andrew K. Rose & Mark M. Spiegel, 2007. "International financial remoteness and macroeconomic volatility," Working Paper Series 2008-01, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:2008-01
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Business cycles;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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