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Financial market integration, labor markets, and macroeconomic policies

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  • Çenesiz, M. Alper
  • Pierdzioch, Christian

Abstract

We used a dynamic two-country optimizing model featuring a labor-market friction to analyze the implications of financial market integration for the propagation of macroeconomic policies in an open economy. Our main result is that the labor-market friction we analyzed substantially reduces the magnitude of the effect of financial market integration on the propagation of macroeconomic policies.

Suggested Citation

  • Çenesiz, M. Alper & Pierdzioch, Christian, 2008. "Financial market integration, labor markets, and macroeconomic policies," International Review of Economics & Finance, Elsevier, vol. 17(3), pages 467-476.
    • Handle: RePEc:eee:reveco:v:17:y:2008:i:3:p:467-476
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