| Abstract: |
This paper evaluates the effects of financial globalization on growth and
macroeconomic volatility, from 1984 to 2003, for a sample of 43 countries.
Particular attention is given to those effects on the member countries of the
Latin American Reserve Fund (FLAR): Bolivia, Colombia, Costa Rica, Ecuador,
Peru, and Venezuela. The findings show that financial globalization spurs
growth, when the countries’ income level is controlled; it does not increase
macroeconomic volatility, as it is commonly stated, but does not reduce it
either. Belonging to FLAR does not seem to make a difference in terms of
growth and macroeconomic volatility; however, the findings of a strong
negative effect on the volatility of consumption might be related to the fact
that those countries have an insurer (FLAR) that has helped them to smooth
consumption during periods of adverse external shocks. |