TY  - GEN
ID  - heidok17058
CY  - Heidelberg
KW  - Heterogeneous Beliefs
KW  -  Financial Integration
KW  -  Incomplete Markets
UR  - https://archiv.ub.uni-heidelberg.de/volltextserver/17058/
A1  - Rieger, Jörg
TI  - Financial Integration with Heterogeneous Beliefs
T3  - Discussion Paper Series, University of Heidelberg, Department of Economics
AV  - public
EP  - 26
Y1  - 2014/06//
N2  - In this paper we study the effects of ?nancial integration on risk-sharing. Conventional macroeconomic theory suggests that the integration of ?nancial markets improves welfare. In contrast to the literature we assume that households have heterogeneous beliefs. Because of the differences in beliefs, households are not only sharing the risk but also speculating. We show that with speculation, ?nancial integration can increase the risk in the economy and that a full ?nancial integration is not always bene?cial. We also have a numerical example for a small set of countries and show that the losses due to heterogeneous beliefs are small.
ER  -