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Some studies indicate that correlations between GDP growth in Japan and in emerging East Asian countries are consistently positive; others claim that such correlations are consistently negative. In this analysis of 10 East Asian countries over 1975-2002 using quarterly GDP data, a Markov-switching vector autoregressive system with three growth cycle regimes is used to examine to what extent such correlations are sensitive to third-country effects, transmission mechanisms, and the quality of Japanese output data. After controlling for third-country effects, correlations with Japan are found to be almost uniformly negative. When transmission variables are taken into account, however, positive correlations appear during rapid-growth regimes for China, Malaysia, Singapore, Taiwan, and South Korea. When higher-quality Japanese output data are used, shocks in these countries are symmetric with Japan's disturbances in growth-recession and rapid-growth regimes. However, synchronization with Japan is never present in the normal-growth regime. Because these five countries are not fully synchronized with Japan, it is probably premature for them to engage in exchange rate arrangements involving the yen. Copyright (c) 2005 Center for International Development and the Massachusetts Institute of Technology.

Potential new entrants to the European Union from Central and Eastern European countries face many challenges to achieve financial convergence with the existing EU nations. Using detailed case studies from Bulgaria, the Czech Republic, Latvia, Lithuania and Poland and analysis of cross country data from these regions, Financial and Monetary Integration in the New Europe looks at the key issues for applicant countries as they negotiate the terms of their membership in the European Union. Of major concern to these countries is the financial sector and its implications for economic growth and the conduct of macroeconomic policy. The book examines, in particular, monetary and exchange rate policies, banking regulation and financial market efficiency. The overall impact of building a market driven financial system on economic development is also explored.

At the initiative of the Centre d’Etudes Prospectives et d’Informations Internationales (CEPII), the Bank of France’s Foundation for Research, and the Institut d’Economie publique of the University of Aix-Marseille (IDEP), a new forum to discuss economic policy was established. The first meeting of this forum was held at the Bank of France in April 2002. Its objective is to create a new platform of discussion in Paris, on monetary and financial affairs among university researchers, managers of financial enterprises and officials from monetary and financial institutions.