Financial interdependencies and causality in the European Union

Abstract

The main objectives of this paper are the study of foreign direct investment (FDI) among several UE countries, the appreciation of the interdependencies among them, the integration and co-integration of the FDI export series, in order to try to discover whose economies are the financial engines of the EU, the appreciation of the way of absorption of the FDI in the destiny countries of this money, the way that the economies found to regain the equilibrium after a foreign investment stimulus. In methodological terms the paper uses the VAR modelling theory, it optimizes the lag length, it uses the SURE method to estimate the parameters, it appreciates the IRF (functions), it uses the Granger causality and the Cholesky Variance Decomposition to study the degree of dependence or of independence of one economy against the others. Before this, it studies the stationarity, the integration and the co-integration of the series.