CORDIS
EU research results

CORDIS

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International Capital Flows and Emerging Markets

Project information

Grant agreement ID: 263846

Status

Closed project

  • Start date

    1 January 2011

  • End date

    30 September 2016

Funded under:

FP7-IDEAS-ERC

  • Overall budget:

    € 900 000

  • EU contribution

    € 900 000

Hosted by:

Centre de Recerca en Economia Internacional (CREI)

Spain

Objective

Financial liberalization in emerging markets has not produced the benefits predicted by conventional, neoclassical models. There is consensus that in reality financial frictions must play a larger role than these models anticipated. The objective of this research project is to enhance our understanding of how this happens, emphasizing the interactions between financial integration and the workings of domestic financial markets.
The project is structured around a set of related questions. (i) Can these interactions account for the macroeconomic effects of financial liberalization? (ii) How should emerging markets manage financial integration? Should they rely on financial systems that facilitate segmentation between domestic and international markets, as in the 70s and 80s? (iii) What are the implications for the global imbalances that contributed to the recent crisis? Can emerging markets export their vulnerabilities to advanced countries? (iv) Can these interactions explain the appearance of bubbles? What are their effects on the workings of international and domestic financial markets?
Gross capital flows reflect risk in domestic financial markets and also raise this risk by increasing the incentives to default. This complementarity is highly destabilizing. (v) Does the recent global financial crisis and associated collapse in gross capital flows reflect such forces? Have they been present in previous crises, particularly in emerging markets?
Emerging markets are more financially integrated than during the cold war. But the current situation has an antecedent in the late 19th century. Traditionally, integration is taken as exogenous. I will explore the forces that shape the process of integration. (vi) Is there any relationship between the existence of a hegemonic power, Britain in the late 19th century and the US since the 1980s, and financial integration? (vii) What will be the effect of the ongoing weakening of the hegemonic power of the US?

Principal Investigator

Fernando Ariel Broner (Dr.)

Host institution

Centre de Recerca en Economia Internacional (CREI)

Address

Ramon Trias Fargas 25/27
08005 Barcelona

Spain

Activity type

Research Organisations

EU Contribution

€ 900 000

Principal Investigator

Fernando Ariel Broner (Dr.)

Administrative Contact

Anna Rios (Ms.)

Beneficiaries (1)

Centre de Recerca en Economia Internacional (CREI)

Spain

EU Contribution

€ 900 000

Project information

Grant agreement ID: 263846

Status

Closed project

  • Start date

    1 January 2011

  • End date

    30 September 2016

Funded under:

FP7-IDEAS-ERC

  • Overall budget:

    € 900 000

  • EU contribution

    € 900 000

Hosted by:

Centre de Recerca en Economia Internacional (CREI)

Spain