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This paper examines the relationships between Russian and other equity markets over the period of 1995-2004. To account for potential instability in the market relationships we apply a number of cointegration approaches: Gregory-Hansen [1996. Residual-based tests for cointegration in models with regime shifts. Journal of Econometrics 70, 99-126] test, which allows for a structural break in the relationships, a stochastic cointegration framework by McCabe [2003. Testing for Stochastic Cointegration and Evidence for Present Value Models. Working Paper], the non-parametric test by Breitung [2002. Nonparametric tests for unit roots and cointegration. Journal of Econometrics 108(2), 343-363] and a regime-switching cointegration model in the spirit of Ho [1999. Financial liberalization and international capital mobility of Taiwan: a regime-switching approach. Asian Economic Journal 13(4), 407-417]. The tests point to a significant agreement that the Russian equity market remained isolated from the influence by international markets in the long run and that while a structural break might have occurred in August 1998 this did not alter the nature of long-run relationships. JEL classification: G10 G15 Keywords: Stock market integration CEE stock markets Russian Stock Market Cointegration

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. Keywords: Financial integration; Real interest rates real stock returns; International money; Financial history

The convergence of economies is usually studied by examining the association between the per capita output's growth rate and the primary amount of the per capita output. It was argued that this approach is correct only when economies have similar first-order autoregressive dynamic structures and that the cross-economy differences must be under control. Economic data from the mainland US states from 1929-1991 and for 54 countries from 1959-1990 were studied. It was argued that the evidence for the convergence of economies are not valid since economies do not have similar first-order autoregressive dynamic structures.

A study was conducted to examine the impact of financial integration between countries which depend on their local financial system's method of taxation. A model depicting overlapping generations and explicit financial intermediation between two countries is developed. Governments earn income from seigniorage while setting inflation rates and reserve levels on bank deposits. Results show that expected liberalization makes government increase reserve ratios before it happens.

The European Community has been working towards the establishment of a single regional financial market and financial integration. Coordination of regional economic policy has been the goal of the European Monetary System, as a means of converging domestic inflation rates and reducing foreign exchange volatility. Research studies show that european domestic money markets are directly related to one another, but are affected independently with respect to local bank markets.

Byline: Michael Keen (1) Author Affiliation: (1) Department of Economics, University of Essex, Wivenhoe Park, Colchester, CO4 3SQ Article History: Registration Date: 05/09/2004