Financial intermediation and the international business cycle: The case of small countries with big banks

Vol: 
22/2011
Author name: 
Kamber G
Thoenissen C
Year: 
2011
Month: 
July
Abstract: 

We examine the transmission mechanism of banking sector shocks in a twocountry DSGE model. Assuming that the home country is small relative to the rest of world, we nd that spillovers from foreign banking sector shocks are modest unless banks in the small country hold foreign banking assets. The correlation between home and foreign GDP rises with the exposure of the domestic banking sector to foreign bank assets.

Publication file: 

Updated:  22 June 2024/Responsible Officer:  Crawford Engagement/Page Contact:  CAMA admin