A SEARCH FOR CLOSER ECONOMIC RELATIONS IN EAST ASIA

In recent years, growing interdependence in East Asia through trade and financial cooperation heightened the need for East Asian Economies to engage in closer regional economic relations. This paper attempts to discuss emerging economic integration efforts in East Asia with special reference to bilateral and regional free trade agreements. It discusses backgrounds for recent developments of East Asian regionalism in terms of deepening intraregional economic dependence and financial cooperation, and South Korea's position towards FTAs with major trading partners as well as East Asian economic integration. Important issues and challenges for an East Asian FTA are presented.     

Why Do EPS Forecast Error and Dispersion Not Vary with Scale? Implications for Analyst and Managerial Behavior

We document a counter‐intuitive finding regarding analyst forecasts of quarterly earnings per share (EPS): magnitudes of deviations from benchmarks—individual forecasts versus consensus (dispersion) and consensus versus actual (forecast error)—do not vary with scale. Seasonally differenced EPS, or time‐series forecast error, also exhibits substantial lack of variation with scale, but only for firms followed by analysts. This lack of variation with scale is not observed for analyst and time‐series forecasts for (a) EPS for some countries, (b) sales and cash flows for all countries, and (c) stock splits. We propose and investigate different explanations for these puzzling regularities that have important implications for practice and research. We believe the cause is managerial smoothing of EPS designed to reduce across‐firm variation in EPS volatility.     

IS THE BALANCING ITEM FOR AUSTRALIA SUSTAINABLE? EVIDENCE FROM A THRESHOLD AUTOREGRESSIVE MODEL WITH AN AUTOREGRESSIVE UNIT ROOT

This article applies an unrestricted two-regime threshold autoregressive (TAR) model with an autoregressive unit root to examine the sustainability of the balancing item of the balance of payments for Australia from the first quarter 1960 to the second quarter 2006. The main finding is that the balancing item of the balance of payments in Australia is characterised by a non-linear, but stationary, series meaning that the balancing item is sustainable. This result implies that short-run volatility in the balancing item has no effect on the reliability of reporting of the balancing item in the long-run.