The Federal Republic of Germany (F.R.G.) used the Hallstein Doctrine from 1955-1970 to prevent the worldwide recognition of the German Democratic Republic (G.D.R.). By denying the existence of a separate German state and thus the de facto division of Germany, the F.R.G. sought to perpetuate the idea of one German nation and to ease reunification. In addition, the F.R.G. claimed to be the sole, legitimate representative of German interests, and hoped to prevent the G.D.R. from acting as a separate Germany in world affairs. As a sanction, the Doctrine effectively prevented the international recognition of the G.D.R.. Also, the G.D.R.'s trade with Third World nations, from whom recognition was most likely, was severely limited. Unfortunately, the Doctrine also prevented the reunification of Germany.

The question for this thesis is whether the four major stock markets--the United States, Great Britain, West Germany, and Japan are interdependent or segmented. The study period runs from February 1979 to June 1987, with the Wall Street Journal as a source of data. The Granger causality test is used to test for relationships among the four major stock markets. The thesis is divided into five chapters-- 1) statement of the problem; 2) survey of literature; 3) methodology; 4) results and 5) conclusions. The overall findings of this thesis indicate that there are few or no comovement similarities among all the four stock markets. However, the findings do point out the significant influence of the United States stock market on the other three stock markets.