Global Diversification, Growth and Welfare with Imperfectly Integrated Markets for Goods / Bernard Dumas, Raman Uppal.

Format:

Book

Author/Creator:

Dumas, Bernard.

Contributor:

National Bureau of Economic Research.

Uppal, Raman.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6994.

NBER working paper series no. w6994

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

In this article, we examine the effect of the imperfect mobility of goods on international risk sharing and, through that, on the investment in risky projects, welfare and growth. We find that the welfare gain of financial market openness is not monotonic with respect to investors' risk aversion and the aggregate volatility of output growth. Our main result is that the welfare gain from integration is not drastically reduced by the presence of goods market imperfections, modeled as a cost of transferring goods from one country to the other. Hence, financial market integration may be a worthwhile goal to pursue even at a time when full goods mobility has not been achieved.

Notes:

Print version record

March 1999.