The Euro-Mediterranean Partnership and Financial Integration: a first assessment for selected countries

In this paper, we try to provide a first assessment on the extent of financial integrationand convergence between selected European and Southern Mediterranean countriesinvolved in the Barcelona process. In particular, we implement a simple test of capitalmobility based on the verification of the international real interest parity hypothesisbetween domestic rates against the real rate of Germany, used as the Europeanreference country, and against the real rate of the US. We repeat the test before andafter the introduction of the Euro, and then measure the speed of real interest rateconvergence.