This research takes a rigorous approach to examining available data for signs of regional integration and interprets the findings in terms of their illustration of the changing structure of the international political economy. A range of methodologies are examined and the inadequacies of various commonly-used approaches to measure regionalisation are discussed. Bearing this in mind, statistical measures of regional bias are developed, and time series of results are displayed to show trends in the three major economic areas over the past three decades in a way that has not been attempted in other studies. The findings suggest that regional integration has been advancing steadily in North America and Europe and there are suggestions that preferential trading arrangements have helped to promote closer regional integration. Surprisingly, the preferential bias between the founder members of the European Union is little changed in the past three decades. In the developed world the non-discriminatory qualities of some of the deeper aspects of regionalism have helped to blunt its preferential impact, as have corporate organisational strategies, which are also important in shaping regional production. The impact of preferential regional arrangements on internalisation of corporate transactions is ambiguous. It is argued that multinational corporations are less concerned about whether liberalisation is regional or multilateral than is commonly assumed. This makes the "building block-stumbling block" debate less important than the question of whether barriers to cross-border business are declining. Taking the analysis down to the micro level highlights the complex relationship between trade and investment flows which is not captured in theoretical literature or the available statistics. Although economics can explain the attractiveness of regional agreements, political economy explanations are useful to explain its growing popularity. One neglected issue is the benefit resulting from lower systemic risk. A more accurate description of the structural change identified in this research is that of "regional globalisation", where the prime concern of multinational corporations is that of globalisation, but it is a trend which is currently manifested through regional organisation. This is not a fixed trend and could be superseded by sub-or supra-regional integration depending on technical change and political co-operation.

This Thesis contains an examination of the time-series properties of swap spreads, their relation with credit spreads and an estimation of the risk premium embedded in the swap spread curve. Chapter 2 introduces the main institutional aspects of swap markets, and studies the time-series properties of swap spreads. These are shown to be non-stationary and display a time-varying conditional volatility. Chapter 3 provides evidence of cointegration between corporate bond spreads and swap spreads. We estimate an error-correction model, including additional variables such as the level and slope of the yield curve, taking into account the exogenous structural break due to the crisis of August 1998. We find evidence that the relation between swap and credit spreads arises from the swap cash flows being indexed to Libor rates. Chapter 4 studies the risk premium in the term structure of the swap spreads, obtaining evidence that it is time-varying. The slope of the swap spread curve is shown to predict the changes in swap spreads. These results are relevant for the study of the risk premium in credit markets, and extend the existing literature on riskless Treasury securities. Chapter 6 develops the asymptotic properties of the quadratic variation estimator of the volatility of a continuous time diffusion process. We explore the case in which the number of observations tends to infinity, while the time between them remains fixed. For the case of a geometric Brownian motion, we show that the estimator is asymptotically biased, but the bias is a random variable that converges. We study the behaviour of this random variable via a simulation study, that shows that it typically has a "small" effect. We conclude by exploring some practical applications related the specification of the volatility for financial time series.

The unifying theme in my PhD thesis is the effect that credit market imperfections have on aggregate outcomes. My main interest is in the collateral amplification mechanism and on the welfare effects that economic shocks and policies have on different groups in society. In my first chapter (which is joint with Nobu Kiyotaki and Alex Michaelides), we develop a life-cycle model of a production economy in which land and capital are used to build residential and commercial real estate. We find that, in an economy where the share of land in the value of real estates is large, housing prices react more to an exogenous change in expected productivity or the world interest rate, causing a large redistribution between net buyers and net sellers of houses. Changing financing constraints, however, has limited effects on housing prices. My second and third chapters examine environments with credit constrained entrepreneurs similarly to the original Kiyotaki and Moore (1997) paper. My second chapter asks the question of whether tightening capital requirements may be welfare improving when firms face credit constraints. I find that the answer is 'no'. Although tightening the collateral constraint dampens business cycle fluctuations, the first order cost in terms of reduced access to credit is too great. My third chapter examines the extent to which a borrower's reputation for repayment can serve as intangible collateral, thus explaining the movement of downpayment requirements over the business cycle. The main finding is that, under standard technology shocks, down-payments move in a pro-cyclical fashion. Introducing a pro-cyclical productivity gap between firms as well as counter-cyclical degree of idiosyncratic production risk helps to generate counter-cyclical down-payment requirements.

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