Monetary and Financial Integration: Evidence from Portuguese Borrowing Patterns

2004-07 | June 1, 2004

This paper examines the impact of European Monetary Union (EMU) accession on bilateral Portuguese international borrowing patterns. Using a difference-indifferences methodology, I demonstrate that Portugal’s accession to the EMU was accompanied by a change in its borrowing pattern in favor of borrowing from its EMU partner nations. This extends the evidence in the literature that overall international borrowing is facilitated by the creation of a monetary union, and raises the issue of financial diversion. The results are shown to survive a wide variety of robustness checks and are corroborated by preliminary evidence concerning Greece’s accession to EMU in 2001.

Article Citation

M. Spiegel, Mark. 2004. “Monetary and Financial Integration: Evidence from Portuguese Borrowing Patterns,” Federal Reserve Bank of San Francisco Working Paper 2004-07. Available at https://doi.org/10.24148/wp2004-07

About the Author
Mark Spiegel
Mark Spiegel is a senior policy advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Mark Spiegel