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Journal Articles Economica Year : 2008

Financial Integration, GDP Correlation and the Endogeneity of Optimum Currency Areas

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Abstract

The paper analyses the relationship between trade, financial integration and business cycle synchronization in the euro area. The introduction of the euro has had a noticeable impact on European financial markets. Evidence that capital market integration exerts a positive effect on output correlation has two major implications. First, it corroborates the hypothesis of the endogeneity of optimum currency areas, whereby after joining a monetary union countries better meet standard OCA criteria; second, it provides European policy-makers with yet another reason to pursue financial integration in the euro area (and in prospective members as well).
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Dates and versions

hal-01022326 , version 1 (10-07-2014)

Identifiers

  • HAL Id : hal-01022326 , version 1
  • SCIENCESPO : 2441/9857

Cite

Stefano Schiavo. Financial Integration, GDP Correlation and the Endogeneity of Optimum Currency Areas. Economica, 2008, 75, pp.168-189. ⟨hal-01022326⟩
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