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A simple model of two-country bargaining for financial integration

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  • Xinhua Gu
  • Baomin Dong

Abstract

This article treats financial openness as a practical dimension on which two countries can negotiate for capital mobility benefit sharing. A capital-exporting country has some first-mover advantage in bargaining with its importing counterparts for their opening. Yet the former country's impatience can act against its own interests when faced with the latter's reluctance to fully liberalize financial systems. Hence it may be unwise to push them into prematurely opening up their capital markets.

Suggested Citation

  • Xinhua Gu & Baomin Dong, 2012. "A simple model of two-country bargaining for financial integration," Applied Economics Letters, Taylor & Francis Journals, vol. 19(8), pages 725-728, May.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:8:p:725-728
    DOI: 10.1080/13504851.2011.597717
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    References listed on IDEAS

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