How European Unification Has Shaped the Debate on Measuring International Financial Integration

Abstract

In this paper we analyse a chronicle of economic theory on international financial integration post-WWII to the present date. Our focus is on theories that have somehow quantify the state and speed of international financial integration. We are able to contrast and compare three distinct strands that have brought forward conditions for its measurement. It is shown that European unification provides much of the empirical testing ground for these measures of international financial integration from the late 1980s. It is also shown that European unification in its more progressed and recent state of Economic and Monetary Union (EMU) has reinvigorated the research field with the emergence of new measures and as such continues to shape the debate.

Keywords: Europe, international financial integration, financial markets, macroeconomics, finance

JEL Classification: B22, E44, E36, G15