This study provides a comprehensive investigation on the relation between financial integration and consumption risk sharing.
Standard theory predicts that one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing. In this paper, we provide an empirical evaluation of the patterns of risk sharing among OECD Countries and examine how international financial integration has affected the evolution of these patterns.
The seminal studies on consumption smoothing and financial integration (i.e. Kose et all. 2009 Sorensen 2007) do not include in their analysis the most recent years. It would be of high priority to consider the possible effects of the Recent Financial Crisis. Moreover, the case of EU/OECD Countries is particular important because they experimented an huge increase of financial flows over the period 2000-2015.