Financial Development and Business Cycle Volatility in OECD Countries

In this paper, we study empirically the effect of the development of financial systems on the volatility of business cycles based on a sample of OECD countries between 1995 and 2005. We find that countries characterized by developed stock markets experience less volatile business cycles, while the development of banking sectors does not seem to play an important role for macroeconomic volatility. Our results are consistent with the view that developed financial markets help to overcome information frictions and corporate governance issues and thereby dampen the amplitude of fluctuations

Projektbeginn: 01.05.2011
Projektende: 31.12.2013

Prof. Dr. Jarko Fidrmuc, Dr. Johann Scharler

Zeppelin University Friedrichshafen
Zeppelin-Lehrstuhl für Internationale Wirtschaftstheorie & -politik (eingerichtet 05 / 2011)

Am Seemooser Horn 20
88045 Friedrichshafen

Telefon: +49 7541 6009-1241
Fax: +49 7541 6009-1299
Email: jarko.fidrmuc@zu.de
http://www.zeppelin-university.de/deutsch/lehrstuehle/internationales_management/internationales_management_profil.php

• eigenfinanziertes Forschungsprojekt

• Fidrmuc, Jarko, Foster, Neil, Scharler, Johann: Labour Market Rigidities and International Risk Sharing across OECD Countries, Journal of International Money and Finance, 2011 (30): 660-677.