The “flying geese” model of Asian economic development: origin, theoretical extensions, and regional policy implications

This paper presents a comprehensive review of the “flying geese” (FG) model, which recently has become well known as a way of explaining rapid economic growth in East Asia. Kaname Akamatsu’s 1930s work introduced the concept. Through statistical analysis of industrial development in pre-war Japan, this author followed Akamatsu in developing a theoretical model called Kojima Model I. Subsequent works produced Kojima Models II and III.The regional transmission of FG industrialization has been noted as an engine of Asian economic growth, due in part to Saburo Okita’s forceful presentation of the theme of the FG model in a 1985 lecture. It is hoped that this paper will help to advance a better understanding of the FG model, its historical origin, its theoretical extensions, and its relevancy, as well as its incompleteness as a model of economic development.     

On Pricing Exponential Square Root Barrier Knockout European Options

A barrier option is one of the most popular exotic options which is designedto give a protection against unexpected wild fluctuation of stock prices.Protection is given to both the writer and holder of such an option.Kunitomo and Ikeda (1992) analytically obtained a pricing formula forexponential double barrier knockout options. Since the logarithm of theirproposed barriers for the stock price process S(t), whichisassumed to be geometric Brownian motion, are nothing but straight lineboundaries, the protection provided by them is not uniform over time. Toremedy this problem, we propose square root curved boundaries±btfor the underlying Brownian motion process W(t). Since thestandarddeviation of Brownian motion is proportional to t, theseboundaries(after transformation) can be made to provide more uniform protectionthroughout the life time of the option. We will apply asymptoticexpansions of certain conditional probabilities obtained by Morimoto (1999)to approximate pricing formulae for exponential square root double barrierknockout European call options. These formulae allow us to computenumerical values in a very short time (t < 10^–6sec), whereas it takesmuch longer to perform Monte Carlo simulations to determine optionpremiums.     

Stable Optimal Cycles With Small Discounting in a Two-sector Discrete-time Model: A Non-bifurcation Approach

This paper presents a standard two-sector optimal growth model with general neoclassical production functions: strictly quasi-concave, twice continuously differentiable homogeneous of degree 1 functions. Instead of applying the standard local bifurcation theory, I exploit two well established properties in Turnpike Theory—"simple dynamics" and the Neighbourhood Turnpike— and, combining both results, I demonstrate that there exists an interval of the discount factor near 1 such that a corresponding optimal steady state is totally unstable and an optimal path converges asymptotically to a two-period cycle for a chosen discount factor in it.
JEL Classification Numbers: O21, O41.     

An Analysis of the Effect of Schooling,Experience and Sex On Earnings in the Government and Private Sectors of Urban Java

The returns to education in Indonesia are analysed using Susenas data. The private sector is found to reward education more generously than the public sector, while the latter puts a premium on experience. A casual analysis suggests general sex discrimination against female workers at any given level of education; however, once experience is allowed for, the negative sex differentials become insignificant. Finally, the general returns to education are of the order of 15–17% additional income for each additional year of schooling, which is a very high rate of return compared with other countries.     

Rational expectations and non-neutrality of money

Zusammenfassung Rationale Erwartungen und Nicht-Neutralit?t des Geldes. - In diesem Aufsatz zeigt der Verfasser, da\ eher die Nicht-Neutralit?t des Geldes als die Neutralit?t die Regel und nicht die Ausnahme ist, wenn vollst?ndige Informationen vorliegen und Erwartungen rational gebildet werden. Er kommt zu diesem Ergebnis, indem er drei wohlbekannte Modelle untersucht und beweist, da\ die Ergebnisse auf der Modifikation einer einzigen Voraussetzung beruhen, d.h., da\ die Modelle und deren Ergebnisse nicht robust sind. In dem Lucas-Modell von 1972 ist es der Substitutionseffekt, der wichtig ist. Dem Modell von Barro fügt der Autor die Annahme hinzu, da\ die zeitlich aufeinanderfolgenden Geldbest?nde voneinander statistisch abh?ngig sind. Im Lucas-Modell von 1973 nimmt der Autor an, da\ Nachfrageverschiebungen einer Chi-Quadrat-Verteilung folgen und nicht normal verteilt sind. In diesem Falle beeinflussen nicht nur unvorhergesehene, sondern auch bekannte Nachfrage?nderungen die Produktionsentwicklung.

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Résumé Expectatives rationnelles et la non-neutralité de la monnaie. - Dans cet article l’auteur démontre que la non-neutralité au lieu de la neutralité de la monnaie est la règle et pas l’exception si les informations sont parfaites et si les expectatives sont formées rationnellement. II arrive à ce résultat en analysant trois modèles bien connus et en démontrant comment les conclusions dépendent de la modification d’une seule supposition. En cette manière il démontre que les conclusions gagnées par d’autres auteurs ne sont pas robustes. Dans le Lucas modèle de 1972 c’est un effet de substitution qui est important. La supposition que les balances monétaires sont statistiquement dépendantes au cours du temps est ajoutée au modèle de Barro. Dans le Lucas modèle de 1973, l’auteur suppose que les changements de la demande sont caractérisés par la distribution X² et pas par la distribution normale. Dans ce cas il n’y a pas seulement les changements de demande imprévus mais aussi des changements connus qui Effectuent la production réelle.

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Resumen Expectativa racional y dinero no neutral. - En este trabajo el autor muestra que la no neutralidad y no la neutralidad es la regla más bien que la exceptión bajo condiciones de información perfecta y de expectativas rationales. Esta meta es alcanzada analizando tres modelos bien conocidos y mostrando cómo las conclusiones dependen de la modificatión de una sola premisa. De este modo se demuestra que las conclusiones de otros autores no resultan robustas. En el modelo de Lucas de 1972 se destaca el efecto de substitutión. Al modelo de Barro se le a?ade la influencia del tiempo sobre la demanda de dinero. En el modelo de Lucas de 1973 el autor supone que los cambios de demanda están distribuidos de manera X² y no normalmente. En este caso no sólo los cambios de demanda no anticipados sino también los anticipados afectan la productión real.

     

Perfect foresight dynamics in binary supermodular games

The present paper considers equilibrium selection in binary supermodular games based on perfect foresight dynamics. We provide complete characterizations of absorbing and globally accessible equilibria and apply them to two subclasses of games. First, for unanimity games, it is shown that our selection criterion is not in agreement with that in terms of Nash products, and an example is presented in which two strict Nash equilibria are simultaneously globally accessible when the friction is sufficiently small. Second, a class of games with invariant diagonal are proposed and shown to generically admit an absorbing and globally accessible equilibrium for small frictions.     

CHANGE DETECTION OF ORDERS IN STOCK MARKETS USING A GAUSSIAN MIXTURE MODEL

We propose a method for detecting changes in the order balance in stock markets by applying a stochastic model to the feature vectors extracted from the order‐book data of stocks. First, the data are divided into training and test periods. Next, a Gaussian mixture model is estimated from the feature vectors extracted from the order‐book data in the training period. Finally, the goodness of fit of the feature vectors in the test period over this model is calculated. Using the proposed method, we found that the order balances of stocks for which insider trading was reported were unusual. Copyright © 2014 John Wiley & Sons, Ltd.     

Coordination failure in repeated games with private monitoring

Players coordinate continuation play in repeated games with public monitoring. We investigate the robustness of such equilibrium behavior with respect to ex-ante small private-monitoring perturbations. We show that with full support of public signals, no perfect public equilibrium is robust if it induces a “regular” 2×2$2\times 2$ coordination game in the continuation play. This regularity condition is violated in all belief-free equilibria. Indeed, with an individual full rank condition, every interior belief-free equilibrium is robust. We also analyze block belief-free equilibria and point out that the notion of robustness is sensitive to whether we allow for uninterpretable signals.     

Contagion of Self‐Interested Behavior: Evidence from Group Dictator Game Experiments

We examine how group decision‐making affects other‐regarding behavior in experimental dictator games. In particular, we assess whether the effects of iterated games differ for group and individual decision‐making and whether the difference in decision‐making style (individual or group) changes the perception of social identity. We make two findings on group decision‐making. First, group decisions become more selfish when repeating the game after changing group members. Second, a dictator group donates more to a recipient group at the same university than to a recipient group at a different university. These findings are not true for individual decision‐making.     

Self-Defeating Regional Concentration

Most policy debates on regional policies implicitly assume that there is too much concentration. In our two-region model of migration, desirable concentration fails to occur under some conditions, and undesirable concentration occurs in others. In the latter case, even though the individuals collectively prefer to be distributed evenly across the two regions, they end up concentrating into one region in their pursuit of a better life. Hence, the freedom to move can be self-defeating. We characterize the conditions for such self-defeating concentration to occur. The coordination failures between the entry decision of service firms and the migration decision of individuals are caused by the incompleteness of markets due to the endogeneity of the range of services available, which deprive the agents of the opportunity to signal demand and supply for potential services. The argument does not rely on price distortions, the nonconvexities implied by increasing returns and nontradedness, congestion externalities, nor myopia in migration decisions.