Why principals tolerate biases of inaccurate agents

Some agents are more accurate than others in estimating the best policy. The more accurately an agent estimates a policy's effects, the more he will resist biases, such as bribes from a special interest. Thus, a special interest needs to pay a larger bribe to an accurate agent than to an inaccurate agent. The accurate agent who is biased will then more likely cause harm than does an inaccurate agent who favors the special interest. Therefore, the principal may gain more from controlling biases of an accurate agent than of an inaccurate one. Thus, high ability of public officials may be associated with little corruption.     

Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Sub‐Saharan Africa

The paper examines the monetary policy actions through which central banks in sub‐Saharan Africa have tried to eliminate the negative impacts of the shocks facing their economies. We compare two different monetary policy regimes: a currency board regime (in the CFA zone) and an inflation targeting policy regime (Ghana and South Africa) when central banks respond to demand, supply, and fiscal shocks. We extend the usual forecasting and policy analysis system models to replicate the economic features of these economies during the period 2002–12 and to evaluate the impact of several policies in response to these shocks. We find that both policies are inappropriate in helping the economies escape from the effects of negative demand shocks, both are essential when negative shocks to primary balance occur, while inflation targeting dominates the currency board regime as a strategy to cope with positive shocks to inflation.     

Competition for private capital and central grants: the case of Japanese industrial parks

Local governments invest in public infrastructure to develop their regions. When they depend on intergovernmental grants for local development and have opportunities to lobby upper-level governments for such grants, horizontal intergovernmental competition in lobbying activity may emerge in addition to competition over public infrastructure. This paper empirically examines the existence of these interactions between Japanese localities, by using data on the value of industrial parks as infrastructure provisions and on personnel interchanges between the central and local governments as a measure of lobbying activity. Our results suggest that a Japanese local government’s choice of the size of industrial parks and its invitation to central officers to act as a director on loan are positive responses to the neighboring local government’s policy choices. As the value of the industrial parks in a district is affected by the neighboring districts’ lobby activities and their industrial park values, we can interpret these results as evidence of inter-regional competition in these two dimensions, rather than control by the central government in this unitary state.     

Fiscal restraints by advisors

This study investigates the role of fiscal advisors in maintaining government fiscal discipline when the advisor’s appointment is determined endogenously. Our theoretical model shows that an incumbent politician has an incentive to employ an external advisor as a commitment device for fiscal discipline before being aware of his own competence level. The advisor acts as a restraint on public expenditure, which works to control the incumbent politician’s ex post overspending to buy votes. Our empirical analysis supports this hypothesis in the Japanese case where governments with directors from the central government tend to spend less.     

Business process semi-automation based on business model management

It is important to respond to customers' requirements more rapidly than ever before due to the recent trend in e-business and its technologies. In order to achieve an agile response, we have to manage business models, to reflect the changes in the models and to develop or modify IT systems for further chances. This paper proposes a management framework of layered enterprise models. The proposed framework consists of a business model repository and a software repository, and defines three different grain sizes of modeling layers, namely business modeling, business process modeling and business application modeling, in order to support business modeling and application development. This framework helps us to develop business application in incremental deployment of analysis, design, and implementation to execute business processes. We have implemented a prototype environment using Java. Each repository's contents are described using XML so that the repositories are interoperable. Copyright © 2003 John Wiley & Sons, Ltd.     

Electoral control over policy-motivated candidates and their policy biases

We present an election model employing candidates with policy preferences, and show how re-election pressure induces candidates to keep their campaign promises in finitely repeated competitions. The game consists of two periods, each of which comprises an election followed by the winner’s policy implementation. Following the first election, the incumbent may signal his dishonesty by implementing a policy different from his campaign promise. If the citizens care about political honesty, this choice reduces the incumbent’s probability of re-election. An equilibrium is derived which demonstrates that even with term limits, an elected candidate’s deviation from his campaign promise is controlled by the citizens’ monitoring of his performance. Strong public response to the dishonesty of politicians thus serves as a commitment device. The author is grateful to anonymous referees and to the editor of the journal for many valuable comments and suggestions. The author also thanks Masaki Aoyagi, Motonari Kurasawa, Yukihiro Nishimura, Shigehiro Serizawa, Takashi Ui, and participants in the seminars held by the Institute of Statistical Research, Meikai University, Osaka University, University of California, Irvine, and Yokohama National University for their insightful comments.     

Financial Mechanism and Enforceability of International Environmental Agreements

We examine how international coordination among countries generates a trend towards establishing an international institution for the provision of global public goods. In the present model, the forces creating international agreement are a politician??s motive for re-election and a financial mechanism for compliance. If a politician expects another politician in a neighboring country to signal his good performance to his citizen by participating in the agreement, and is aware that his ex post deviation will be deterred by the financial mechanism, he too decides to participate in the agreement, which then corrects externality problems.     

How an ineffective agent can increase his budget

A principal aware that an agent exerts little effort will nevertheless fund the agent, because the principal values the output the agent produces. The agent in turn decides how hard to work by anticipating how his behavior affects the budget the principal will give him. Under some conditions, the principal gives the agent large budgets anticipating that the agent will not work hard. The corrupt environment aggravates the problem. An agent who can set the budget ameliorates the problem, though incompletely.     

日本女人为何吃不胖?

日本是全世界肥胖率最低的国家之一，无论男性还是女性，平均寿命都在全世界名列前茅，他们的心血管疾病患病率尤其低。日本女子为何从不发胖？至今都是一个谜。     

West African Single Currency and Competitiveness

This paper compares different nominal anchors to promote internal and external competitiveness in the case of a fixed exchange rate regime for the future single regional currency of the Economic Community of the West African States (ECOWAS). We use counterfactual analyses and estimate a model of dependent economy for small commodity exporting countries. We consider four foreign anchor currencies: the US dollar, the euro, the yen and the yuan. Our simulations show little support for a dominant peg in the ECOWAS area if they pursue several goals: maximizing the export revenues, minimizing their variability, stabilizing them and minimizing the real exchange rate misalignments from the fundamental value.