https://macropaperwarehouse.com/authors/ana-fostel/Ana FostelHugo -- gohugo.ioen-usThu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/capital-flows-and-the-global-collateral-cycle/Thu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/capital-flows-and-the-global-collateral-cycle/<p>The paper asks why large gross financial flows exist between similarly rich countries (especially the U.S. and Europe), why financial integration raises rather than lowers asset price volatility, and why safe-asset prices rise during crises. The authors argue that cross-country disparities in collateral technology — the capacity to securitize domestic assets into state-contingent tranches — can account for all three phenomena simultaneously, without invoking differences in preferences, endowments, production technologies, or idiosyncratic shocks.</p>