Financial integration in Europe: Evidence from Euler equation tests

J.J.G. Lemmen, S.C.W. Eijffinger

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper applies Obstfeld's Euler equation tests to assess the degree of financial integration in the European Union. In addition, we design a new Euler equation test which is intimately related to Obstfeld's Euler equation tests. Using data from the latest Penn World Table (Mark 6), we arrive at the following ranking of financial integration in the European Union: low integration (Greece and Portugal) intermediate (Austria, Denmark, Finland, France, Ireland, Italy, Spain and Sweden) and high (Belgium, Germany, the Netherlands and the United Kingdom). Furthermore, it appears that there is still significant room for risk diversification among European Union countries.
Original languageEnglish
PublisherUnknown Publisher
Volume1995-32
Publication statusPublished - 1995

Publication series

NameCentER Discussion Paper
Volume1995-32

Fingerprint

European Union
Financial integration
Euler equations
Ireland
Italy
Austria
Denmark
Spain
Sweden
Germany
Ranking
Belgium
Greece
Risk diversification
France
Finland
Portugal
The Netherlands

Keywords

  • EU
  • International Financial Markets
  • euler equations
  • Financial Integration
  • finance

Cite this

Lemmen, J. J. G., & Eijffinger, S. C. W. (1995). Financial integration in Europe: Evidence from Euler equation tests. (CentER Discussion Paper; Vol. 1995-32). Unknown Publisher.
Lemmen, J.J.G. ; Eijffinger, S.C.W. / Financial integration in Europe : Evidence from Euler equation tests. Unknown Publisher, 1995. (CentER Discussion Paper).
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Lemmen, JJG & Eijffinger, SCW 1995 'Financial integration in Europe: Evidence from Euler equation tests' CentER Discussion Paper, vol. 1995-32, Unknown Publisher.

Financial integration in Europe : Evidence from Euler equation tests. / Lemmen, J.J.G.; Eijffinger, S.C.W.

Unknown Publisher, 1995. (CentER Discussion Paper; Vol. 1995-32).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Financial integration in Europe

T2 - Evidence from Euler equation tests

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AU - Eijffinger, S.C.W.

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PY - 1995

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N2 - This paper applies Obstfeld's Euler equation tests to assess the degree of financial integration in the European Union. In addition, we design a new Euler equation test which is intimately related to Obstfeld's Euler equation tests. Using data from the latest Penn World Table (Mark 6), we arrive at the following ranking of financial integration in the European Union: low integration (Greece and Portugal) intermediate (Austria, Denmark, Finland, France, Ireland, Italy, Spain and Sweden) and high (Belgium, Germany, the Netherlands and the United Kingdom). Furthermore, it appears that there is still significant room for risk diversification among European Union countries.

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KW - International Financial Markets

KW - euler equations

KW - Financial Integration

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Lemmen JJG, Eijffinger SCW. Financial integration in Europe: Evidence from Euler equation tests. Unknown Publisher. 1995. (CentER Discussion Paper).