The Real Effects of Financial (Dis)Integration: A Spatial Equilibrium Analysis of Europe

@inproceedings{Chakraborty2016TheRE,
  title={The Real Effects of Financial (Dis)Integration: A Spatial Equilibrium Analysis of Europe},
  author={Indraneel Chakraborty and Rong Hai and Hans Aasnes Holter and Serhiy Stepanchuk},
  year={2016}
}
Using data from 15 European Union economies, we quantify the real effects of supply-side frictions due to financial disintegration of European countries since the 2008 financial crisis. We develop a spatial equilibrium model with heterogeneous countries. Financial institutions allocate capital endogenously across countries, determining the cost of capital of firms and the wealth of nations. The cost of financial disintegration is reduced access to capital for firms and a resulting fall in… CONTINUE READING

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