EMU, EU, capital market integration and consumption smoothing

Jacques Melitz and Atanas Christev

No 7776, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This empirical study of the impact of EMU on capital market integration and consumption smoothing comes to three conclusions: first, EMU promotes members? holdings of foreign assets and foreign liabilities; second, no benefits of consumption smoothing result; third, EU membership, not a single money, nevertheless increases consumption smoothing. The source of this last influence on consumption smoothing is an important issue. Theoretically it could come from more tradable capital through greater price competition, more contestable home markets and the greater harmonization of regulations. There is also a seeming conflict between our results and those of one strand of the literature. However, the relevant writings concentrate on the effects of asymmetric output shocks while we study the unconditional impact of international portfolio di-versification in the presence of all shocks. This can explain the difference.

Keywords: Capital market integration; Consumption smoothing; Currency union; European monetary union; European union (search for similar items in EconPapers)
JEL-codes: E00 F36 F41 G10 (search for similar items in EconPapers)
Date: 2010-04
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP7776 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: EMU, EU, Capital Market Integration and Consumption Smoothing (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:7776

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP7776

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().