Price distortion induced by a flawed stock market index

Despite the introduction of sophisticated stock market indices, investors often trade portfolios of the flawed indices to change their exposure to the market. In this study, we show that these transactions cause significant mispricing in individual stocks, especially during periods of significant market movement. As an influential, albeit flawed, stock index, we focus on the Nikkei 225. We find index constituents that are excessively weighted on the index, experience buying (selling) pressure when the stock market surges (falls), and experience price corrections after such periods of change. In contrast, non-constituent stocks do not experience such trading pressure.     

Structural Decomposition Analysis of Japan’s Energy Transitions and Related CO2 Emissions in 2005–2015 Using a Hybrid Input-Output Table

Environmental and Resource Economics - This study investigates Japan’s energy transitions in 2005–2015, which involved massive economic disruptions due to the 2011 Great East Japan...     

The influence of indoor air on personal exposure to volatile organic compounds and its risk estimation

This paper summarizes the results of personal exposure monitoring and estimates the risk from exposure to 18 volatile organic compounds compared with health criteria set by the US Environmental Protection Agency. In study 1, personal exposure levels and outdoor air concentrations were compared, and in study 2, personal exposure levels and the corresponding indoor air concentrations were compared. From these studies, it was concluded that personal exposure to volatile organic compounds depended markedly on indoor air quality and that handling of compounds increased personal exposure markedly. Risk estimations indicated that chloroform in tap water, benzene from cigarette smoke and p -dichlorobenzene from household insecticide needed caution.     

Platform strategy of video game software in Japan, 1984–1994: theory and evidence

This paper analyzes a model of platform competition in markets of system products composed of hardware and complementary software, with a specific focus on exclusive contracting. When hardware products are strongly differentiated, or when consumers value the marginal benefit of additional software variety highly, we find that, in equilibrium, hardware firms will engage in exclusive contracting of software development. This finding is strongly supported by our empirical results in the Japanese home video game industry, dominated by Nintendo from 1984 to 1994. Copyright © 2010 John Wiley & Sons, Ltd.     

Why do reputable agents work for safer firms?

Safer firms receive funding from reputable venture capitalists and offer new securities underwritten by reputable investment banks. We offer a new explanation for these facts employing a moral-hazard model in which a firm and an agent are matched endogenously. More reputable agent's effort has a greater impact on output. Safer firm's output reflects the agent's hidden effort more accurately and therefore the agent's pay scheme tied with the output powerfully motivates her to exert effort. In equilibrium, a safer firm should be matched with a reputable agent since this combination allows to maximize effort of the reputable agent.     

The Foreign Exchange Origins of Japan's Economic Slump and Low Interest Liquidity Trap

Japan's macroeconomic problem has yet to be properly diagnosed. Throughout the 1990s, policy makers could not decide on the proper macro economic measures to combat the country's severe economic slump. We propose a unified explanation, with deep historical roots, of why aggregate private demand failed to recover after Japan's stock and real estate bubbles burst in 1991 and deflationary pressure continues. The problem is not purely ‘made in Japan’. It arises from Japan's unbalanced mercantile relationship with the United States. Starting in the early 1970s, numerous trade disputes between the two countries created tensions that were (temporarily) resolved by the yen going ever higher against the dollar up to 1995. In the last two decades, this persistent pressure for the yen to rise was further aggravated by Japan's large current‐account (saving) surpluses as the counterpart of America's large current account (saving) deficits. The legacy is the expectation that trade and financial tensions will recur so that the yen will be higher 10, 20, or 30 years from now –with Japan's (wholesale) price level forced correspondingly lower and nominal interest rates on yen assets remaining more than four percentage points less than those on dollar assets. This fear of yen appreciation, whose timing is erratic and unpredictable, now inhibits private domestic investment by both Japanese firms and households. Our theory also explains why, in the late 1990s, nominal interest rates on short‐term yen assets were compressed toward zero so as to destroy the normal profit margins of the banking system. In this liquidity trap, the Bank of Japan –whose monetary policy has been quite ‘expansionary’–is powerless to stimulate the flagging economy. To spring the liquidity trap, eliminate deflationary pressure, and restore macro economic balance in Japan, the American and Japanese governments must act jointly to quash the expectation that the yen will be higher in the future than it is today.     

On the cost-reducing effects of embodied technical progress: a panel study of the steel industry in Japan

To explicitly explain the cost-reducing effects of technical progress experienced by each firm, we assume that technical progress, namely, the prevalence of particular equipment, can be expressed by a function of logarithmic physical capital. Regarding the technology cost structure, we propose a modified dynamic cost function model that consists of the above equation, the translog variable cost equation containing technical progress as one of the factors, and Euler equations with respect to physical and research and development capital stocks. Using data on eight firms in the Japanese electric-furnace steel industry for the period 1970–1998, the model was empirically validated using the generalized method of moments. An elasticity of production cost with respect to technical progress showed a cost-reducing effect. This fact was influenced by the type of product and the extent of each firm’s R&D. Also derived from this model is one reasonable phenomenon of business-cyclically changing the use of endogenous capacity. This economic information supports the appropriateness of the above model, including the assumption of transforming technical progress into an endogenous variable, and the methods of analysis.     

A polyhedral approximation approach to concave numerical dynamic programming

This paper introduces a numerical method for solving concave continuous state dynamic programming problems which is based on a pair of polyhedral approximations of concave functions. The method is globally convergent and produces computable upper and lower bounds on the value function which can in theory be made arbitrarily tight. This is true regardless of the pattern of binding constraints, the smoothness of model primitives, and the dimensionality and rectangularity of the state space. We illustrate the method's performance using an optimal firm management problem subject to credit constraints and partial investment irreversibilities.     

The Changing Nature of Japanese Production Systems in the 1990s and Issues for Labour Studies

The authors discuss the changing character of production strategies and organizational arrangements at three leading Japanese automotive assemblers against a background of concern with the impact of work regimes upon employees. Innovations in production line organization are compared within and between the companies, and the argument advanced suggests that the attempt to ‘humanize’ work routines and procedures, by the leading company especially, has met with mixed results. Sornetimcs more ‘efficient’ technologies and forms of organization have been inhibited in the pursuit of ‘human-centred’ forms of work organization. Nevertheless, the article points up the considerable variations which exist both between and within Japanese companies and trade unions with respect to the understanding of the role played by labour.