This article investigates empirically whether shocks to asset prices transmit into the trade balance through consumption and investment for a group of five of the world’s most industrialized countries. We refer to this transmission channel as the international wealth channel and estimate a...

This paper analyzes the empirical link between asset prices, consumption and the trade balance using a global macroeconometric model developed by Pesaran, Schuermann, and Weiner (2004). The model is estimated for 29 countries with quarterly data over the period 1981Q1 - 2006Q4. Motivated by...

This paper analyzes the empirical link between asset prices, consumption and the trade balance using a global macroeconometric model developed by Pesaran, Schuermann, and Weiner (2004) that explicitly captures each country's position within the world economy through bilateral trade patterns. The...

Recent empirical work has shown that ongoing international financial integration facilitates cross-country consumption risk sharing. These studies typically find that countries with high equity home bias exhibit relatively low international consumption risk sharing. We extend this line of...

In this paper, the authors document a growing divergence between current account imbalances in northern and southern euro area countries from 1992 to 2007. The imbalance occurred without a concomitant rise in productivity and growth in the southern (deficit) countries. The authors argue that...

Recent empirical work shows that ongoing international financial integration facilitatescross-country consumption risk sharing. While these studies employ absolute measures toaccount for a country''s integration in international capital markets, we devise a relativemeasure that captures the...