Financial Integration and Economic Synchronisation (Theoretical Analysis)
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Academic Publishing UNWE (AP-UNWE)
Abstract
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This study examines various mechanisms for the linkage between financial integration and business cycle synchronization. The present study advocates that changes in capital demand lead to divergence while shocks in the integrated financial system cause synchronization. Based on this differentiation the study derives indicators that determine the tendency for synchronization or divergence.
Keywords
Financial integration, Business cycles synchronization, Business cycles divergence, E62 - Fiscal Policy • Modern Monetary Theory, E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy • Stabilization • Treasury Policy