The global financial crisis and the European single market: The end of integration?

Taufiq Choudhry* (Corresponding Author), Gerhard Kling, Ranadeva Jayasekera

*Corresponding author for this work

Research output: Contribution to journal › Article

6 Citations (Scopus)

Abstract

Using various versions of the Feldstein-Horioka (FH) coefficient, we measure the time-varying degree of capital mobility and economic integration in the European Union. Prior research shows high correlation between domestic investment and savings implying low capital mobility. This surprising result has led to subsequent research on the ?Feldstein-Horioka puzzle?. Our empirical findings show that the puzzle is less puzzling with a coefficient of 0.52 in the period 1990-1995 in EU countries approaching its minimum value of 0.02 in the period 2003-2008. This clearly indicates that the FH coefficient is time-varying signalling a deepening of economic integration in the European Union. Yet, with the advent of the Global Financial Crisis the FH coefficient has increased to 0.26 underlining worrying signs of disintegration.
Original languageEnglish
Pages (from-to)191-196
Number of pages6
JournalJournal of International Money and Finance
Volume49
Issue numberPart B
DOIs
Publication statusPublished - Nov 2014

Fingerprint

Single European market
Global financial crisis
Coefficients
Feldstein-Horioka
Time-varying
Economic integration
European Union
Capital mobility
Domestic savings
EU countries
Domestic investment
Disintegration
Feldstein-Horioka puzzle

Cite this

The global financial crisis and the European single market : The end of integration? / Choudhry, Taufiq (Corresponding Author); Kling, Gerhard; Jayasekera, Ranadeva.

In: Journal of International Money and Finance, Vol. 49, No. Part B, 11.2014, p. 191-196.

Research output: Contribution to journal › Article

Choudhry, T, Kling, G & Jayasekera, R 2014, 'The global financial crisis and the European single market: The end of integration?', Journal of International Money and Finance, vol. 49, no. Part B, pp. 191-196. https://doi.org/10.1016/j.jimonfin.2014.08.002
Choudhry T, Kling G, Jayasekera R. The global financial crisis and the European single market: The end of integration? Journal of International Money and Finance. 2014 Nov;49(Part B):191-196. https://doi.org/10.1016/j.jimonfin.2014.08.002
Choudhry, Taufiq ; Kling, Gerhard ; Jayasekera, Ranadeva. / The global financial crisis and the European single market : The end of integration?. In: Journal of International Money and Finance. 2014 ; Vol. 49, No. Part B. pp. 191-196.
@article{a8af8f45c0724188b5d3b8f6bc8da174,
title = "The global financial crisis and the European single market: The end of integration?",
abstract = "Using various versions of the Feldstein-Horioka (FH) coefficient, we measure the time-varying degree of capital mobility and economic integration in the European Union. Prior research shows high correlation between domestic investment and savings implying low capital mobility. This surprising result has led to subsequent research on the ?Feldstein-Horioka puzzle?. Our empirical findings show that the puzzle is less puzzling with a coefficient of 0.52 in the period 1990-1995 in EU countries approaching its minimum value of 0.02 in the period 2003-2008. This clearly indicates that the FH coefficient is time-varying signalling a deepening of economic integration in the European Union. Yet, with the advent of the Global Financial Crisis the FH coefficient has increased to 0.26 underlining worrying signs of disintegration.",
author = "Taufiq Choudhry and Gerhard Kling and Ranadeva Jayasekera",
note = "Acknowledgements We also would like to thank the Money Macro and Finance Research Group for their support in organising this conference. We are very pleased and grateful that Professor James Lothian (Fordham University, USA) delivered the keynote speech, and Professor Charles Goodhart (London Business School) presented the lunch time seminar. We are very grateful to our sponsors, the Journal of Inter-national Money and Finance, the Money Macro and Finance Research Group, the Bank of England, Bloomberg and the School of Management,University of Southampton.",
year = "2014",
month = "11",
doi = "10.1016/j.jimonfin.2014.08.002",
language = "English",
volume = "49",
pages = "191--196",
journal = "Journal of International Money and Finance",
issn = "0261-5606",
publisher = "Elsevier",
number = "Part B",

}

TY - JOUR

T1 - The global financial crisis and the European single market

T2 - The end of integration?

AU - Choudhry, Taufiq

AU - Kling, Gerhard

AU - Jayasekera, Ranadeva

N1 - Acknowledgements We also would like to thank the Money Macro and Finance Research Group for their support in organising this conference. We are very pleased and grateful that Professor James Lothian (Fordham University, USA) delivered the keynote speech, and Professor Charles Goodhart (London Business School) presented the lunch time seminar. We are very grateful to our sponsors, the Journal of Inter-national Money and Finance, the Money Macro and Finance Research Group, the Bank of England, Bloomberg and the School of Management,University of Southampton.

PY - 2014/11

Y1 - 2014/11

N2 - Using various versions of the Feldstein-Horioka (FH) coefficient, we measure the time-varying degree of capital mobility and economic integration in the European Union. Prior research shows high correlation between domestic investment and savings implying low capital mobility. This surprising result has led to subsequent research on the ?Feldstein-Horioka puzzle?. Our empirical findings show that the puzzle is less puzzling with a coefficient of 0.52 in the period 1990-1995 in EU countries approaching its minimum value of 0.02 in the period 2003-2008. This clearly indicates that the FH coefficient is time-varying signalling a deepening of economic integration in the European Union. Yet, with the advent of the Global Financial Crisis the FH coefficient has increased to 0.26 underlining worrying signs of disintegration.

AB - Using various versions of the Feldstein-Horioka (FH) coefficient, we measure the time-varying degree of capital mobility and economic integration in the European Union. Prior research shows high correlation between domestic investment and savings implying low capital mobility. This surprising result has led to subsequent research on the ?Feldstein-Horioka puzzle?. Our empirical findings show that the puzzle is less puzzling with a coefficient of 0.52 in the period 1990-1995 in EU countries approaching its minimum value of 0.02 in the period 2003-2008. This clearly indicates that the FH coefficient is time-varying signalling a deepening of economic integration in the European Union. Yet, with the advent of the Global Financial Crisis the FH coefficient has increased to 0.26 underlining worrying signs of disintegration.

U2 - 10.1016/j.jimonfin.2014.08.002

DO - 10.1016/j.jimonfin.2014.08.002

M3 - Article

VL - 49

SP - 191

EP - 196

JO - Journal of International Money and Finance

JF - Journal of International Money and Finance

SN - 0261-5606

IS - Part B

ER -

Access to Document