Volatile capital flows and financial integration : the role of moral hazard

• Main Authors: Kikuchi, Tomoo, Stachurski, John, Vachadze, George
• Other Authors: S. Rajaratnam School of International Studies
• Format: Article
• Language: English
• Published: 2020
• Subjects: Business::Finance; Capital Flows; Moral Hazard
• Online Access: https://hdl.handle.net/10356/142552
• Institution: Nanyang Technological University

We study a model in which income and capital flows between countries are jointly determined in a world economy with integrated financial markets. In a setting that combines risky entrepreneurial activity with moral hazard, we find that a shift from autarky to financial integration leads to boom-bust...