Intro -- Economic Integration and Financial Stability: A European Perspective -- Contents -- I. INTRODUCTION -- II. SYNCHRONIZATION OF REAL ACTIVITY -- III. EQUITY MARKETS INTEGRATION -- IV. SYSTEMIC RISK AND INTEGRATION -- V. CONCLUSION -- Table 1. EGARCH Estimates for the Common Components of...

This paper estimates the magnitude of key effects on the real economy from financial sector stress. We focus on the short-run feedback effect from market-based indicators of financial sector risk to the real economy through the credit channel, and estimate this effect on an economy-wide (macro)...