Consumption volatility and financial openness
- 1 November 2010
- journal article
- research article
- Published by Taylor & Francis Ltd in Applied Economics
- Vol. 42 (28), 3635-3649
- https://doi.org/10.1080/00036840802260916
Abstract
Economic theory predicts that the integration of financial markets lowers the volatility of consumption. In this article, we study long-term trends in the consumption volatility of the G7 countries. Using different measures of financial openness, we find evidence that greater financial openness has been associated with lower consumption volatility. However, volatility of consumption relative to output has not declined.Keywords
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