Òscar Jordà, Moritz Schularick, Alan Taylor, Felix Ward, 25 June 2018

Asset markets in advanced economies have become more integrated than ever before in the history of modern finance. This is especially true for global equities starting in the 1990s. This column argues that this increase in synchronisation is primarily driven by fluctuations in risk appetite rather than in risk-free rates, or in dividends. US monetary policy plays a major role in explaining such fluctuations, and this transmission channel affects economies with both fixed and floating exchange rates, although the effects are more muted in floating rate regimes.

Camilo Umana Dajud, Camilo Umana Dajud, Camilo Umana Dajud, 29 August 2014

Countries facing rising risk premiums on their debt have recognised the need for structural reform, but some politicians have argued that austerity is necessary in the short run because structural reform takes too long. This column argues that financial markets can bring forward the benefits of structural reform, and therefore that such reforms should be given greater weight in the package of crisis responses.

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