This paper investigates the effect of European Monetary Union on the integration of the financial services industry within European using data on the announcements of M&A’s within the industry. We find some evidence that EMU has helped financial integration within the euro area. In addition, financial institutions in EMU countries became more active in initiating integration between EMU and non...

This paper builds a simple theoretical model designed to study dollarization. Each period, a benevolent government decides whether or not to dollarize, how much to borrow or lend on an international bond market, and, if dollarization has not occurred, the devaluation rate. In equilibrium, international borrowing is limited endogenously such that the government always chooses to repay when the p...

We examine the relationship between real and financial integration. Real integration is measured by productivities of capital and labor from trade data for 1982 to 1997. Financial integration is measured by the black market exchange rate. We find more evidence of convergence to equality for returns to capital than for returns to labor. There is some support for associating the convergence of bl...

The goal of this paper is to study the e¤ects of globalization on the workings of asset markets and welfare. To do this, we adopt a “technological”view of the globalization process. That is, we model this process as consisting of a gradual (and exogenous) reduction in the costs of shipping goods across di¤erent regions of the world. In the absence of market frictions, globalization creates fore...