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The global financial crisis and the European single market: The end of integration?

Choudhry, Taufiq and Kling, Gerhard and Jayasekera, Ranadeva (2014) 'The global financial crisis and the European single market: The end of integration?' Journal of International Money and Finance, 49. pp. 191-196.

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Abstract

Using various versions of the Feldstein-Horioka (FH) coefficient, we measure the time-varying degree of capital mobility and economic integration in the European Union. Prior research shows high correlation between domestic investment and savings implying low capital mobility. This surprising result has led to subsequent research on the ‘Feldstein-Horioka puzzle’. Our empirical findings show that the puzzle is less puzzling with a coefficient of 0.52 in the period 1990-1995 in EU countries approaching its minimum value of 0.02 in the period 2003-2008. This clearly indicates that the FH coefficient is time-varying signalling a deepening of economic integration in the European Union. Yet, with the advent of the Global Financial Crisis the FH coefficient has increased to 0.26 underlining worrying signs of disintegration.

Item Type: Journal Article
SOAS Departments & Centres: Departments and Subunits > School of Finance & Management
Legacy Departments > Faculty of Law and Social Sciences > School of Finance and Management
ISSN: 02615606
DOI (Digital Object Identifier): 10.1016/j.jimonfin.2014.08.002
Depositing User: Gerhard Kling
Date Deposited: 26 Sep 2014 10:40
URI: http://eprints.soas.ac.uk/id/eprint/19029

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