Established in 1957 by the Treaty of Rome, the European Union is now made up of 27 members and, as of 2009, accounted for about 30 percent of the gross world product. It began as a customs union between six countries, in an effort to rebuild and unite a war-torn Europe. Today it is an economic and monetary union with ambitions to become a political union. One of the key steps towards that level of unification is the free movement of capital across national borders. To that end the leaders of the EU have put large amounts of resources towards financially integrating the member states.
This paper seeks to measure the level of financial integration of the long term government bond markets from 2002 to 2009. A market can be considered financially integrated if similar participants: first, follow a single set of rules when dealing with financial goods and services; second, have equal access to those goods and services; and third, are not discriminated against when they are participating in the market. Using the yields on the German bonds as a bench mark, yield spreads per quarter from 2002 to 2009 are calculated along with the variance of the yield spreads. The correlations between countries from 2002 to 2009 are also calculated to see how correlation changed over time.
Countries that use the Euro were found to be the most integrated, followed by the countries with pegged currencies, and then the countries with free-floating currencies. Within each subsample, integration either increased or remained static from 2002 to 2006; after 2007, integration decreased.
| Identifer | oai:union.ndltd.org:PITT/oai:PITTETD:etd-04292010-085443 |
| Date | 10 June 2010 |
| Creators | Godse, Anita Rajendra |
| Contributors | Shirley Cassing, Sara Moeller, Edward McGrath, Josephine Olson |
| Publisher | University of Pittsburgh |
| Source Sets | University of Pittsburgh |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.library.pitt.edu/ETD/available/etd-04292010-085443/ |
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