{"id":1648,"date":"2023-02-13T16:19:19","date_gmt":"2023-02-13T16:19:19","guid":{"rendered":"https:\/\/www.fiw.ac.at\/publications\/international-propagation-of-financial-shocks-in-a-search-and-matching-environment\/"},"modified":"2023-02-13T16:19:19","modified_gmt":"2023-02-13T16:19:19","slug":"international-propagation-of-financial-shocks-in-a-search-and-matching-environment","status":"publish","type":"publication","link":"https:\/\/www.fiw.ac.at\/en\/publications\/international-propagation-of-financial-shocks-in-a-search-and-matching-environment\/","title":{"rendered":"International Propagation of Financial Shocks in a Search and Matching Environment"},"content":{"rendered":"\nThis paper develops a two-country multi-frictional model where the freeze on liquidity access to commercial banks in one country raises unemployment rates via credit rationing in both countries. The expenditure-switching channel, whereby asymmetric monetary shocks traditionally lead to negative comovements of home and foreign outputs, is considerably weakened via opposite forces driving the exchange rate. Meanwhile, it is proved that financial market integration forms a transmission channel per se, without resorting to international cross-holdings of risky assets. The search and matching modeling serves two purposes. First, it accounts for the time needed to restore a normal level of confidence following financial market disruptions. Second, it allows dissociating pure liquidity contractions from non-walrasian financial shocks, arriving despite global excess savings and due to heterogeneity in the quality of the banking system. The former induce negative comovements of home and foreign outputs, in accordance with the literature, whereas the new type of financial shocks does generate financial contagion.\n\n","protected":false},"featured_media":0,"menu_order":0,"template":"","jelcode":[315,118,771,87,111,630,513],"keyword":[926,928,925,927,644,924,929],"class_list":["post-1648","publication","type-publication","status-publish","hentry","jelcode-c78","jelcode-e44","jelcode-e51","jelcode-f41","jelcode-f42","jelcode-g01","jelcode-g15","keyword-credit-rationing","keyword-financial-crises","keyword-financial-markets","keyword-financial-multiplier","keyword-international-transmission","keyword-matching-theory","keyword-open-economy-macroeconomies"],"acf":{"year":2011,"month":4,"day":"","volume":"","number":"068","pages":36,"reviewed":"0","citeid":"FIW_WP_068","fiwseries":"FIW Working Papers","event":null},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>International Propagation of Financial Shocks in a Search and Matching Environment - FIW<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fiw.ac.at\/en\/publications\/international-propagation-of-financial-shocks-in-a-search-and-matching-environment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"International Propagation of Financial Shocks in a Search and Matching Environment - FIW\" \/>\n<meta property=\"og:description\" content=\"This paper develops a two-country multi-frictional model where the freeze on liquidity access to commercial banks in one country raises unemployment rates via credit rationing in both countries. The expenditure-switching channel, whereby asymmetric monetary shocks traditionally lead to negative comovements of home and foreign outputs, is considerably weakened via opposite forces driving the exchange rate. 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