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The Internationalization of Money and Finance and the Globalization of Financial Markets

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  • James R. Lothian

    (Fordham University)

Abstract

In this paper I combine long multi-country time series data for interest rates and stock returns with the institutional evidence for much earlier centuries amassed by economic historians to study the question of financial globalization and how it has altered since the late classical era. At their longest, for Dutch and English short-term interest rates, the quantitative data that I use extend back slightly more than three centuries. The institutional history provides information on an additional millennium's worth of experience. The conclusion that I reach is that the internationalization of money and finance and the globalization of financial markets are not new phenomena. They are part of an evolutionary process that began much earlier and that has continued, albeit with periodic interruptions and reversals, for many centuries. What we see today is simply the latest and most advanced manifestation of this process.

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File URL: http://128.118.178.162/eps/if/papers/0311/0311003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Finance with number 0311003.

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Length: 38 pages
Date of creation: 12 Nov 2003
Date of revision:
Handle: RePEc:wpa:wuwpif:0311003

Note: Type of Document - pdf; pages: 38
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Web page: http://128.118.178.162

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Keywords: Financial Integration; real interest rates; real stock returns; international money; financial history;

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  1. Johnson, David R, 1993. "International Interest Rate Linkages in the Term Structure," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(4), pages 755-70, November.
  2. Maurice Obstfeld & Alan M. Taylor, 2002. "Globalization and Capital Markets," NBER Working Papers 8846, National Bureau of Economic Research, Inc.
  3. Kevin H. O'Rourke & Jeffrey G. Williamson, 2000. "When Did Globalization Begin?," NBER Working Papers 7632, National Bureau of Economic Research, Inc.
  4. Lothian, James R & Taylor, Mark P, 1996. "Real Exchange Rate Behavior: The Recent Float from the Perspective of the Past Two Centuries," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 488-509, June.
  5. Lopez, Robert Sabatino, 1951. "The Dollar of the Middle Ages," The Journal of Economic History, Cambridge University Press, vol. 11(03), pages 209-234, June.
  6. Michael D. Bordo & Barry Eichengreen & Jongwoo Kim, 1998. "Was There Really an Earlier Period of International Financial Integration Comparable to Today?," NBER Working Papers 6738, National Bureau of Economic Research, Inc.
  7. George Furstenberg, 1998. "From Worldwide Capital Mobility to International Financial Integration: A Review Essay," Open Economies Review, Springer, vol. 9(1), pages 53-84, January.
  8. Grassman, Sven, 1980. "Long-Term Trends in Openness of National Economies," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 123-33, March.
  9. Eagly, Robert V. & Smith, V. Kerry, 1976. "Domestic and International Integration of the London Money Market, 1731–1789," The Journal of Economic History, Cambridge University Press, vol. 36(01), pages 198-212, March.
  10. Gerald P. Dwyer & James R. Lothian, 2003. "International Money and Common Currencies in Historical Perspective," CEIS Research Paper 9, Tor Vergata University, CEIS.
  11. James Lothian & Yusif Simaan, 1998. "International Financial Relations Under the Current Float: Evidence from Panel Data," Open Economies Review, Springer, vol. 9(4), pages 293-313, October.
  12. Lastrapes, W. D., 1998. "International evidence on equity prices, interest rates and money," Journal of International Money and Finance, Elsevier, vol. 17(3), pages 377-406, June.
  13. Alan M. Taylor, 2002. "A Century of Current Account Dynamics," NBER Working Papers 8927, National Bureau of Economic Research, Inc.
  14. Frankel, Jeffrey A, 1992. "Measuring International Capital Mobility: A Review," American Economic Review, American Economic Association, vol. 82(2), pages 197-202, May.
  15. Kevin H. O'Rourke, 2002. "Europe and the causes of globalization, 1790 to 2000," CEG Working Papers 20021, Trinity College Dublin, Department of Economics.
  16. Johnson, David R., 1992. "International interest rate linkages and the exchange rate regime," Journal of International Money and Finance, Elsevier, vol. 11(4), pages 340-365, August.
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