Convergence of EMU Equity Portfolios

FIW Working Paper Series No. 28

32 Pages Posted: 14 May 2009

See all articles by Maela Giofré

Maela Giofré

University of Turin - Department of Economics and Statistics; CeRP-CCA; Netspar

Date Written: May 14, 2009


This paper demonstrates that, after integration, equity portfolios of countries that joined the European Monetary Union have converged at faster rate than those of NON EMU countries. This outcome can be interpreted as a combination of the convergence of inflation rates and the convergence of investment barriers. On the one hand, the common monetary policy might have driven a stronger co-movement in inflation rates, leading to increasingly similar hedging strategies among member countries. On the other hand, exposure to the common currency might have homogenized bilateral investment barriers, thus inducing increasingly similar portfolio allocations among member countries. We find that the co-movement of inflation rates has not significantly increased after EMU inception, pointing toward an exclusive role for convergence in investment barriers.

Keywords: financial integration, EMU, inflation hedging, investment barriers

JEL Classification: F21, F30, F36, G11, G15

Suggested Citation

Giofré, Maela, Convergence of EMU Equity Portfolios (May 14, 2009). FIW Working Paper Series No. 28, Available at SSRN: or

Maela Giofré (Contact Author)

University of Turin - Department of Economics and Statistics ( email )

Lungo Dora Siena 100/A
Torino, Turin - Piedmont 10153

CeRP-CCA ( email )

Via Real Collegio 30
Moncalieri (TO), Turin 10024

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE

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