Financial and Trade Integration of Selected EU Regions: Dynamic Correlation and Wavelet Approach 1

We evaluate the process of financial and trade integration in 26 European Union (EU) countries over the period 1993 - 2012. We distinguish between "new" and "old" EU countries to compare the processes of financial and trade integration in the developed countries and formerly cent...

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Bibliographic Details
Published in:Ekonomický časopis 2015-08, Vol.63 (7), p.686
Main Authors: Kucerová, Zuzana, Pomenková, Jitka
Format: Article
Language:English
Subjects:
Balance sheets
Business cycles
Correlation analysis
Developing countries
Economic crisis
Eurozone
Fixed exchange rates
Foreign exchange rates
Foreign investment
Integration
International finance
International trade
LDCs
Literature reviews
Monetary policy
Securities markets
Studies
Volatility
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Summary:We evaluate the process of financial and trade integration in 26 European Union (EU) countries over the period 1993 - 2012. We distinguish between "new" and "old" EU countries to compare the processes of financial and trade integration in the developed countries and formerly central-planned economies. We use classical and moving correlation, dynamic correlation, and wavelet co-spectrum. Classical and moving correlation shows the strong relation until 2008. Dynamic correlation confirms strong relation for long and business cycle frequencies. Specification via wavelet co-spectrum reveals that long frequencies are correlated in the period 2000 - 2009, business cycle frequencies in the period 1993 - 1994 and 2003 - 2004 and middle frequencies generally in the period 2008 - 2010. The process of financial integration was stronger in the old EU member countries while the process of trade integration in the new member countries.
ISSN:0013-3035