Real-Financial Linkages Among Open Economies

48 Pages Posted: 23 Mar 2007 Last revised: 7 Aug 2022

See all articles by Sven W. Arndt

Sven W. Arndt

Bank of Greece

J. David Richardson

Syracuse University; National Bureau of Economic Research (NBER)

Date Written: May 1987

Abstract

This paper integrates the contributions to a forthcoming volume of the same title by the authors. The volume analyzes and empirically examines linkages between the real and financial variables that themselves link open economies-- "linkage" thus has a double meaning. Two types of linkages are discussed. Structural linkages describe differences across economies and among sectors in market structure (competitive/oligopolistic), productivity growth, and openness to trade. Inter-temporal linkages describe differences across economies and over time or circumstance in saving preferences and capital formation, government budgets, portfolio shares of "inside" and "outside" assets, and openness to mobile financial flows. Structural linkages are important chiefly for explaining sustained divergences in national competitiveness as measured by purchasing-power-parity norms. Inter-temporal linkages also account for them, as well as for sustained divergences in current and capital-account positions, geographical growth rates, and national incomes of residents.

Suggested Citation

Arndt, Sven W. and Richardson, J. David, Real-Financial Linkages Among Open Economies (May 1987). NBER Working Paper No. w2230, Available at SSRN: https://ssrn.com/abstract=975938

Sven W. Arndt (Contact Author)

Bank of Greece

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GR 102 50 Athens
Greece

J. David Richardson

Syracuse University ( email )

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Syracuse, NY 13244
United States
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National Bureau of Economic Research (NBER)

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