Do small businesses adjust their capital structure? Evidence from the global financial crisis in Japan

We investigate the extent to which small businesses adjust their capital structures to target levels when their leverage increases substantially during a financial crisis. We examine Japan's Emergency Credit Guarantee (ECG) program during the 2008 global financial crisis. The increased leverage from the use of the ECG program during the crisis increased the probability of default. Additionally, small businesses adjusted their leverage ratios to the target range before the crisis. However, such adjustments were weak during and after the crisis, particularly for target firms in the ECG program.     

Voluntary development of environmental management systems: motivations and regulatory implications

Encouraging firms to develop voluntarily more comprehensive environmental management systems (EMSs) is touted as a policy tool to augment mandatory environmental regulations. Using a unique dataset of environmental management practices of Japanese manufacturers and controlling for self-selection bias in survey responses, we find that proxies for regulatory pressures and consumer pressures are the most important factors that motivate firms toward more comprehensive EMSs. Despite the oft-claimed “voluntary” nature of EMS development, our results show that the government may have a role to play in both directly and indirectly affecting EMS development by firms.      

Variance of Firm Performance and Leverage of Small Businesses

We investigate the relationship between leverage and firm performance using small business data from Japan by estimating the effects of leverage on both average firm performance and the variance of firm performance. We find that leverage has a negative effect on average firm performance and a positive effect on the variance of firm performance. This suggests that the problem of moral hazard is severe for highly leveraged firms. However, when highly leveraged firms have sufficient collateral assets, the effects of leverage are positive for average performance, but negative for the variance of performance. This implies that when small firms have sufficient collateral assets, highly leveraged businesses are better performers.     

Productivity growth in east Asia: a reappraisal

In recent years there has been considerable disagreement over the extent to which productivity growth has accounted for the success of the east Asian economies. Empirical evidence, based on forms of growth accounting or direct estimation of a production function, is inconclusive so that the debate appears to be at a stalemate. This article applies an alternative approach, using the Malmquist productivity indices, to investigate the contribution of productivity to the longer term growth. The results support the view that over the longer term, the east Asian economies were input driven but interesting differences arise between countries when shorter periods are analysed.     

Innovation and Market Structure in the Manufacturing Sector: An Application of Linear Feedback Models*

In recent years, there has been a renewed interest in the relationship between market structure and innovation activities at an industry level. The paper examines the relationship between these for the manufacturing sector in a sample of 33 countries. It applies a recently developed method, based on linear feedback models, and uses cross‐country time‐series data. Despite the relatively small number of observations, the results indicate that domestic competition, external market share, and research and development have a positive effect on innovation activities. The results also suggest that the introduction of the foreign competition may have an initial positive effect on innovation activities, but over time this becomes dissipated.     

Do Japanese consumers care about sustainable fisheries? Evidence from an auction of ecolabelled seafood

This paper investigates Japanese consumers' willingness to pay for Marine Stewardship Council (MSC) ecolabelled seafood using a sealed bid, second price auction. Participants in an experiment in Tokyo were provided varying degrees of information about the status of world and Japanese fisheries and the MSC program in sequential rounds of bidding on ecolabelled and nonlabelled salmon products. A random‐effects tobit regression shows that there is a statistically significant premium of about 20 per cent for MSC‐ecolabelled salmon over nonlabelled salmon when consumers are provided information on both the status of global fish stocks and the purpose of the MSC program. This premium arises from a combination of an increased willingness to pay for labelled products and a decreased willingness to pay for unlabelled products. However, in the absence of experimenter‐provided information, or when provided information about the purpose of the MSC program alone without concurrent information about the need for the MSC program, there is no statistically significant premium.     

The distributional effect of the rice policy in Japan, 1986–2010

This study aims to evaluate the distributional effect of the governmental rice policy in Japan on producers, consumers, and government expenditures from 1986 to 2010 using a partial equilibrium model. Policy measures include government purchase of rice, output payment, and acreage control. The simulation result shows that acreage control has been the principal policy measure for transferring income to producers, especially since the enforcement of the WTO Agreement on Agriculture. Acreage control is the policy measure with the lowest total efficiency and highest budgetary efficiency. This result implies that the government’s goal of transferring income to producers with minimum government cost has been achieved through a combination of policy measures.     

The Regime Switching Portfolios

In this paper we develop a portfolio selection theory under regime switching means and volatilities. We use log mean-variance as the portfolio selection criteria and, as a result, the theory is made substantially easier to implement than other existing theories. Moreover, the estimated regimes are easy to interpret as one of the regimes corresponds to the business cycle turning points. Finally, we conduct an asset allocation simulation and obtain reasonable results by introducing an idea of switching volatility targets.     

The Effects of a Consumption Tax on Effective Demand under Stagnation

This paper investigates the effects of a consumption tax on effective demand under stagnation. The existing work shows that a consumption tax does not influence effective demand in the case of a homogeneous household under stagnation. In this paper there are two types of household. One is the richer household, whose level of total assets is relatively high. The other is the poorer household, which owns fewer total assets. In a lump‐sum transfer, when the ratio of the poorer household to the total population is large (small), imposing a consumption tax decreases (increases) effective demand.     

Monetary policy and asset prices in an open economy

This paper examines whether central banks should respond to asset price fluctuations in a two-country sticky price model. We compare a monetary policy rule that targets both domestic asset prices and foreign asset prices with several alternative monetary policy rules. This paper shows that this policy rule can produce preferable outcomes because the domestic central bank incorporates important information that both domestic and foreign asset prices possess into its monetary policy. Our model suggests that central banks should consider both domestic and foreign asset prices in a two country framework with asset price fluctuations.