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Increasing Financial Market Integration, Real Exchange Rates and Macroeconomic Adjustment

  • Adrian Blundell-Wignall
  • Frank Browne
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    This paper is one of four in this Working Paper Series, focusing on financial liberalisation, along with those of Kupiec, Miller and Weller, and Driscoll. It examines the extent to which international financial markets have become more integrated over the past decade. The finding that financial markets are almost fully integrated, in contrast to goods markets which are not, has important implications for real interest rate differentials, real exchange rate behaviour and external adjustment. In particular, the reduced importance of external imbalance and the increased role of real interest rates in real exchange rate determination can be associated with more prolonged misalignments ... Le présent document constitue l'une de quatre études de cette Série consacrée à la libéralisation financière, avec celles de Kupiec, de Miller et Weller, et de Driscoll. Il examine les progrès réalisés dans le processus d'intégration des marchés internationaux de capitaux au cours des dix dernières années. Le constat selon lequel les marchés financiers sont devenus très fortement intégrés, contrairement aux marchés de biens qui ne le sont pas, a d'importantes conséquences sur la formation des différentiels de taux d'intérêt réels, l'évolution des taux de change réels et l'ajustement extérieur. En particulier, l'importance réduite des déséquilibres externes et le rôle accrû joué par les taux d'intérêt réels dans la détermination des taux de change réels peuvent être associés à des phénomènes d'ajustements retardés ...

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    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 96.

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    Date of creation: Feb 1991
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    Handle: RePEc:oec:ecoaaa:96-en
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