Capital mobilityandinternationalsharingofcyclicalrisk

This paperinvestigateswhethertheinternationalglobalizationoffinancialmarkets allowsforsignificantcross-countryrisk-sharingatthebusinesscyclefrequency.Wefind thatcross-countryrisk-sharingisstilllimitedandthisisunlikelytobetheresultof financialfrictionsthatlimitstate-contingentcontracts.Partofthelimitedinternational risk sharingcouldbetheconsequenceoffrictionsthat de-facto reducetheshort-term mobilityoffinancialcapital.Butevenwiththesefrictionswefindsignificantdivergence betweenmodelpredictionsandthedata