This issue has been debated extensively since the start of EMU. The debate has recently intensified, reflecting concerns about the increased divergence of growth rates over the past few quarters and uncertainties deriving from French and Dutch rejections of the Constitutional Treaty. Before I discuss this issue, allow me to offer the following qualification.
Bank of Japan’s March report of recent economic and financial developments1 Bank of Japan, Communication, 16 March 1999. The Bank’s View2 Japan’s economy, at present, appears to have stopped deteriorating. With the increase in public investment underpinning final demand, inventory adjustment has made further progress and production has stopped decreasing. With regard to final demand, business fixed investment has been declining significantly.