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Measuring Financial Market Integration Over The Long Run: Is There A U-Shape?

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Executive Summary

Using long time series for sovereign bond markets of fifteen industrialized economies from 1875 to 2009, the author finds that financial market integration by the end of the 20th century was higher than in earlier periods and exhibited a J -shaped trend with a trough in the 1920s. The main reason for the higher financial integration seen today is the recent extensive globalization. Around the turn of the 20th century, countries frequently drifted apart. Conversely, in recent years, the bond markets of most countries have moved together.

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