The shift of perspective from a national basis to a Euro area basis, inevitably induced by EMU, has led member countries to a parallel shift from equity home bias to equity Euro bias. We interpret this evidence by means of a standard mean-variance portfolio selection model modified in order to...

This paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate. An intertemporal optimizing model suggests that, in the absence of changes in fiscal policy, a more depreciated level of the real exchange can only be...

During the recent turmoil in world financial market and its cascading disruptive effects, the role of financial integration assumes importance. A common outshoot of such financial crises generated locally or regionally is that they spread faster to other connected markets and economies to the...

This paper analyses some long-run macroeconomic effects of European financial integration. In particular we focus on the further reduction and abolition of cross-border barriers impeding the entry into the markets of banking and insurance products. We follow a theoretical as well as an empirical...

Optimum currency areas and asymmetric shocks Comparison of two studies: • Krugman Paul (1993) "Lessons from Massachusetts for EMU" in Torres, F. & Giavazzi, F. (Editors) Adjustment and Growth in the European Monetary Union London: CEPR and Cambridge University Press. and • Frankel Jeffrey...

In this paper, we document the main factors underlying the foreign portfolio inflows to Gulf Corporation Council countries (hereafter GCC) by employing a recently published database of cross-country portfolio holdings by the International Monetary Fund. We find that bilateral factors such as...

Recent theoretical and empirical literature suggests that foreign direct investment (FDI) exerted positive impact on economic growth through the process of technological diffusion. The literature also suggests that the development of the domestic financial system of the host country is an...

This work deals with the analysis and classification of the existing theoretical and empirical models describing the factors of establishing reserve currencies, and their role in today's global payment system. The important part of the study is devoted to the concept of a regional reserve...

The Euro Plus Pact was approved by 23 EU countries in March 2011. The Pact stipulates a range of quantitative targets meant to strengthen competitiveness and convergence with the ultimate aim of preventing unsustainable financial imbalances from accumulating. This paper uses Granger causality...

This paper analyzes the sovereign risk contagion using credit default swaps (CDS) and bond premiums for the major eurozone countries. By emphasizing several econometric approaches (nonlinear regression, quantile regression and Bayesian quantile regression with heteroskedasticity) we show that...