Subsidy competition and imperfect labor markets

This study presents a two‐country model of subsidy competition for manufacturing firms under labor market imperfections. Because subsidies affect the distribution of firms, subsidies influence unemployment rates and welfare in both countries. We show that when labor market frictions are high, subsidy competition is beneficial, although subsidies under subsidy competition are inefficiently high. In the coordinated equilibrium, the supranational authority provides a subsidy to firms that equal the expected total search costs, which increases the number of firms relative to laissez‐faire and improves welfare relative to laissez‐faire and subsidy competition. Finally, we find that a rise in a country's labor market frictions raises the equilibrium subsidy rate, affects unemployment rates, and lowers welfare.     

Dynamic Patterns of Trade Imbalances with Recursive Preference

Based on the recursive preference approach, the dynamic and global properties of the two‐country open economy are examined with one good and inputs of labor and capital, with capital being freely traded internationally. First, by showing that the world's consumption increases (decreases) with an increase (decrease) in the world's capital, the global stability of the economy is obtained. Secondly, the nonmonotonicity of consumption between impatient country 1 and patient country 2 is established. Thirdly, with the Cobb–Douglas‐type production function and country 1's technological superiority, the dynamic trade patterns and the asset–debt position are derived.     

Sunspots and Hopf bifurcations in continuous time endogenous growth models

First we treat a three-dimensional continuous time abstract stationary model that includes one predetermined variable and two non-predetermined variables. We construct stationary sunspot equilibria in this model under the following two alternative conditions: (i) a steady state has two stable roots and one unstable root; and (ii) A closed orbit has a two-dimensional manifold on which it is asymptotically stable. Next, we apply these results to the models due to Lucas and Romer that undergo Hopf bifurcations for some parameter values. We construct sunspot equilibria in these models.     

Assessment of passenger benefits brought about by international airport projects

This study sets forth a method to calculate the passenger benefits of an international airport project and assesses the passenger benefits brought about by two international airport projects.An international airport project mainly increases the number of flights and the possibility of determining convenient timetables. It does not significantly decrease the flight time of international travel. Thus, the user benefits brought about by an international airport project cannot be expressed by the conventional concept of ‘traveling time’, which is the term generally used.In this study, the ‘Expected Value of Traveling Time’ and ‘Expected Value of Generalized Cost’ are presented as indexes to evaluate improvements in convenience brought about by international airport projects. The passenger benefits of two airport projects in Japan are measured by consumer surplus calculated from the demand function using these indexes.These indexes are accurately calculated taking into consideration factors such as scheduling connections between domestic and international transport, and so enable a grasp not only of reductions in flight time, but also of passenger benefits resulting from international airport projects, such as increases in the number of flights and reductions in the time required to make transfers during domestic travel.     

THE WELFARE EFFECTS OF FOREIGN CAPITAL INFLOW WITH TARIFF-RIDDEN AND QUOTA-RESTRICTED IMPORTS*

The welfare effects of foreign capital inflow and changes in the foreign price and tariff rate of a tariff-ridden imported good are considered for a small country for both 3 times 2 and 3 times 3 trade models with a quota-restricted imported good (whose special case is a nontraded good). For the 3 times 2 model, foreign capital inflow does not affect home welfare when there is no tariff on imports, but it harms the home country if a tariff is imposed on the imports to the extent that the tariff-ridden imported good is more capital intensive than the exported good. On the other hand, for the 3 times 3 model the foreign-capital inflow benefits the home country if the tariff rate is below a certain level under the analogous capital-intensity assumptions. The welfare effects of changes in the foreign price of the tariff-ridden good and its tariff rate remain the same for both models.     

The Optimal Tariff Formula in a Two-Period Economy

The optimal tariff formula is derived for a large country trading both consumption goods and an investment good in a two-period economy. The formula greatly simplifies the results of the standard one-period economy where both consumption goods and real capital are traded with or without a non-traded good; in particular, the results do not depend on the relative intensities of the two goods.
JEL Classification Numbers: D11, F11, F34.     

On the non-existence of a marginal cost pricing equilibrium and the Ioffe normal cone

This paper is Chapter II of the author's Ph. D. thesis, being written at the University of Illinois. The author is indebted to M. Ali Kahn for his guidance, to R. Vohra for a valuable conversation and to an ananonymous referee for comments. The author was informed by M. Ali Khan that, subsequent to the submission of this paper, a similar example was independently announced by B. Cornet. — As usual, all remaining errors are the author's.     

Risk-sensitive Portfolio Optimization with Two-factor Having a Memory Effect

Risk-sensitive portfolio optimization problems are studied with a specific setting: a market model with a two-dimensional linear-factor is considered, where the factor consisits of an Ornshtein-Uhlenbeck process and its historic weighted-average. A sharp solvability condition is obtained in risk-seeking case. Further, an application of CPPI technique is mentioned to treat a problem with floor-constraint.     

INCOME REDISTRIBUTION THROUGH THE TAX SYSTEM: A SIMULATION ANALYSIS OF TAX REFORM

In this paper, we consider reforming the tax system to a comprehensive income tax model in order to amend the differential treatment of income sources. Our simulation analysis shows that the tax reform improves the effectiveness of the tax system on the redistribution of all sources of income including earned income, financial wealth income, and imputed rent. The analysis of incidence of the tax reform suggests that the tax burden for young renters decreases the most and that for young loan-free land owners increases the most through this tax reform.