Global Integration Of Central And Eastern European Financial Markets: The Role Of Economic Sentiments

This paper examines the importance of different economic sentiments, e.g. consumer moods, for the Central and Eastern European Countries (CEECs) during the transition process. The authors first analyze the importance of economic confidence with respect to the CEECs' financial markets. Since the integration of formerly strongly-regulated markets into global markets can also lead to an increase in the dependence of the CEECs' domestic market performance on global sentiments, they also investigate the relationship between global economic sentiments and domestic income and share prices. Finally, they test whether the impact of global sentiments and stock prices on domestic variables increases proportionally with the degree of integration. They also account for effects stemming from global income.