Using managers' expectations for ex-ante policy evaluation: Evidence from the COVID-19 crisis

Evaluation of the impacts of government policies during an economic crisis is often delayed until the outcomes are realized. Policies can be better guided if they can be evaluated amid a crisis, before the realization of outcomes. This study examines whether survey data on the expectations of small business managers can help evaluate two high-stake subsidies for firms amid the COVID-19 crisis in Japan, namely, Subsidy Program for Sustaining Businesses (SPSB) and Employment Adjustment Subsidy (EAS). We evaluate the accuracy of managers' expectations, estimate the impact of subsidies on the expected firm survival, and compare it with the estimated impact on realized survival. We find that the managers' expectations on their future sales, survival rate, and the possibility of receiving these subsidies predict the realized outcomes, although they were highly pessimistic about their survival rates. We find that the estimated impacts of the SPSB on the expected survival rates have the same sign as the estimated impact on the realized survival rates, but the size is more than twice because of the pessimism on survival. The estimated impacts of the EAS are both insignificant. Therefore, although its impact may be overestimated, managers' expectations are useful for selecting an effective policy.     

Edgeworth's taxation paradox when firms engage in cost-reducing investment

This study examines whether and when Edgeworth's taxation paradox, that taxation decreases the equilibrium price, occurs in a free-entry Cournot oligopoly with cost-reducing investment. In contrast to the fact that no paradox occurs in the short-run equilibrium, the paradox can occur in the long-run equilibrium, in which the number of firms is endogenous. However, the conditions under which the paradox occurs are restrictive when there is no investment. By incorporating cost-reducing investments into the model, we demonstrate that the paradox is likely to occur under less restrictive conditions, irrespective of whether the tax is specific or ad valorem.     

Methods for strengths use support: A multi-dimensional model

This study examines how middle managers support their employees' strengths use via three sequential analyses. In Study 1, an open-ended questionnaire survey of high-performing middle managers at a global manufacturer in Japan (n = 144) was conducted to collect comments on strengths use support (SUS). The grounded theory approach was used to generate four categories of SUS, and a quantitative questionnaire was developed based on the analysis. In Study 2, three dimensions of SUS (understanding employees' strengths and interests, developing strengths through challenging assignments, and supporting the accomplishment) were identified by exploratory factor analyses using the questionnaire survey data of middle managers in Japanese firms (n = 208). Study 3 examined the validity and reliability of the three-dimensional model using confirmatory factor analysis of the questionnaire survey data of middle managers in Japanese firms (n = 209).