Handbook of Safeguarding Global Financial Stability

Chapter 15

Financial Development and Global Imbalances

E.G. Mendoza*,^† and V. Quadrini^‡,§,†

^*University of Maryland, College Park, MD, USA

^†National Bureau of Economic Research (NBER), Cambridge, MA, USA

^‡University of Southern California, Los Angeles, CA, USA

^§Centre for Economic Policy Research (CEPR), London, UK

Outline

Introduction

Financial Globalization and Financial Underdevelopment: Stylized Facts

Explaining Global Imbalances: Financial Globalization with Financial Underdevelopment

Mendoza et al. (2009)

Quantitative findings, extensions, and robustness

Cabellero et al. (2008)

Other Contributions with Market Incompleteness

Consequences of Global Imbalances

Welfare

Imbalances as a Source of Crisis

Imbalances as a Mechanism for Amplification ...