Optimal Mortgage Refinancing with Regime Switches

A model of rational mortgage refinancing is developed where the drift and volatility of interest rate process switch between two regimes. Because of the possibility of a regime shift, the optimal refinancing policy is characterized by the different threshold of interest differential for each regime. Numerical simulation demonstrates that the optimal refinancing threshold in each regime can be smaller or larger than the threshold under single-regime models. Finally, we evaluate the predictions of the model, based on the estimated parameters for a two-regime model to capture the evolution of the mortgage rates in the US. Our model can produce both late and early refinancing, which is consistent with the observed refinancing behavior. The views expressed in this paper are solely those of the authors and do not necessarily reflect official positions of the Sumitomo Trust and Banking Co., Ltd.     

How an innovation is formed: A case study of Japanese word processors

An innovation is formed in the social system through the diffusion process, and artifacts that embody the innovation alter their aspects considerably. This study proposes an innovation-diffusion model on the assumption that an innovation interacts with a social system, which shows dynamic and self-organizing characteristics. That is, firstly, an innovation appears that overthrows the existing technological paradigm. Secondly, after the appearance of an innovation, engineers or relevant professionals witnessing the innovation conduct various kinds of trial and error to compete with each other. Thirdly, under passing through the turmoil period, the social system in which an innovation has been implemented becomes changing its structure. Fourthly, once an innovation has surpassed the irreversible phase, obtaining the dominant design, it becomes embedded into the social system. In order to verify the model, I refer to the diffusion process of the Japanese word processors into the Japanese society around 1980s. Following the result of this study, this paper points out that the diffusion theory should be reconsidered, especially about the meanings of the critical mass, the dichotomy of the innovator-imitator model, and so on. Besides, strategic planners or policy makers would do well to construct innovation strategies or technology policies to implement the innovation by affecting such factors as the internal and external influence factors and the population of the potential adopters.     

Development and validation of a situational judgement test of Japanese leadership knowledge

ABSTRACT

Leadership research has accumulated a wealth of empirical findings about what leadership behaviours are effective in various business environments. We took advantage of these empirical findings to develop a situational judgement test (SJT) of leadership knowledge with correct answers. The SJT contains four leadership dimensions: task-focused, relationship-focused, transformational, and developmental leadership. Item response theory and confirmatory factor analyses were used to examine the psychometric properties of the SJT, based on a sample of 658 Japanese college students. Ultimately, we confirmed a four-factor model and retained 21 of 53 situation questions for the final SJT.     

Learning program for enhancing visual literacy for non-design students using a CMS to share outcomes

This study proposes a basic learning program for enhancing visual literacy using an original Web content management system (Web CMS) to share students’ outcomes in class as a blog post. It seeks to reinforce students’ understanding and awareness of the design of visual content. The learning program described in this research focuses on to address how to create meanings of visual content that is important to express information visually, and includes three exercises based on perception, visual variables, and signification. The Web CMS to publish student works and share in class helps enhance students’ reflection. We also developed a rubric as an assessment device for students’ outcomes. The content of the learning program and its implementation are described with the support of observational data.     

A new approach to the effect of intervention frequency on the foreign exchange market: evidence from Japan

This article estimates and analyses the effect of intervention frequency on the yen/dollar market, using daily intervention data. We examine using a nonlinear methodology, with the frequency of intervention from April 1991 to December 2005 as a focal explanatory variable. In this article, we also introduce a flexible target zone model that is capable of characterizing the dynamic behaviour of an exchange rate implied by the original target zone model of Krugman and its modifications. The empirical results show the importance of considering the threshold effect when analysing the effect of intervention due to the presence of asymmetry in the foreign exchange market. Moreover, we show that a high frequency intervention stabilizes the exchange rate by reducing exchange rate volatility, especially when the yen appreciates.     

Controls over the Development of Large Stores in Japan

This paper shows how public policy in Japan has reacted to the location and development of new large stores, and the pressures for large stores. The current policy, introduced in 1979, is attempting to limit the expansion of hypermarkets, large super-markets, discount stores, etc., and provides a mechanism and procedure for the co-ordination of future growth. The structural changes occurring in Europe are also appearing in Japan. Pre-1979 policy controls are examined, as is the 1979 legislation, together with the growth strategies of large stores in the 1980s. The paper concludes by suggesting that it will be interesting to analyse in the coming years whether Japanese policy aimed at controlling large store development is any more successful than the various, largely unsuccessful, attempts at large store control introduced by European governments.