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Within and across countries heterogeneity in international finance

Objective

Financial globalization has led to a large increase in capital flows together with increasing global imbalances. Understanding how investors structure their international portfolios and how such decisions interact with the real side of the economy has become a critical macro issue. Recently, policy makers have been advocating the understanding of capital flows and global imbalances as a necessary step to analyze the roots of the last financial crisis and its international transmission. Another important evolution is the larger role played by fast growing emerging markets. The world is getting more asymmetric as they feature very different characteristics compared to developed countries.

INFINHET aims at developing new dynamic multi-country macro-models to better account for the heterogeneity across agents and across countries in order to answer age-old questions in international macro such as the benefits from financial integration, the adjustment of global imbalances, the dynamics of exchange rates and asset prices, international financial contagion, the international dimension of tax policies.

The first part of INFINHET deals with new methods for dynamic stochastic models with heterogeneous agents/countries. Applications include normative questions regarding the welfare impact of policies in open economies and positive questions regarding the dynamics of asset prices and capital flows. The second part focuses on long-term issues in multi-country overlapping generations models. It analyzes the importance of asymmetries between countries on macroeconomic outcomes in a globalized world. Besides differences in growth and demographics, asymmetries in financial institutions, insurance mechanisms and welfare states are emphasized, with a particular focus on the specificities of China. The theoretical predictions will be tested empirically. This will require the development of panel data based on cross-country aggregates and the use of micro data based on individuals.
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Principal Investigator

Nicolas Mathieu Georges Coeurdacier (Prof.)

Host institution

FONDATION NATIONALE DES SCIENCES POLITIQUES

Address

Rue Saint Guillaume 27
75337 Paris

France

Activity type

Higher or Secondary Education Establishments

EU Contribution

€ 1 176 938

Principal Investigator

Nicolas Mathieu Georges Coeurdacier (Prof.)

Administrative Contact

Cathy Benard (Mrs.)

Beneficiaries (1)

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FONDATION NATIONALE DES SCIENCES POLITIQUES

France

EU Contribution

€ 1 176 938

Project information

Grant agreement ID: 336748

Status

Closed project

  • Start date

    1 January 2014

  • End date

    31 December 2018

Funded under:

FP7-IDEAS-ERC

  • Overall budget:

    € 1 176 938

  • EU contribution

    € 1 176 938

Hosted by:

FONDATION NATIONALE DES SCIENCES POLITIQUES

France