Benoît Mercereau Financial Integration in Asia: Estimating the Risk-Sharing Gains for Australia and Other Nations

IMF, Working Paper. 2006. No. 06/267.Holding foreign assets reduces the volatility of a country’s income by allowing countries to share risk. Yet, financial integration is limited in Asia. This paper estimates how much Australia and other countries in the Asia-Pacific region would gain from greater financial integration. The results suggest that these welfare gains are large, which argues in favor of a progressive capital account liberalization across the region.