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A PRELIMINARY INVESTIGATION OF THE EFFECTS OF EXCHANGE RATES ON NATIONAL EQUITY MARKET RELATIONSHIPS

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This paper analyzes the effect of exchange rate changes on relationships existing between equity markets in the U.S., Canada, France, Germany, Japan, and United Kingdom during the period 1990-1995. Close equity market linkages are found between the U.S. and Canada, France, Germany, and United Kingdom. Exchange rate effects on those linkages are important only for the U.S. and the three European countries. Intertemporal analysis finds that exchange rate effects for the relationship between the U.S. and Japan, which were not significant for the entire period, have become significant only after 1994.

Abstract

INTRODUCTION

DATA AND METHODOLOGY

EMPIRICAL RESULTS

AN EXTENSION

SUMMARY AND CONCLUSIONS

REFERENCES

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