Demographic Transition and Fertility Rebound in Economic Development*

Recent evidence on the “fertility rebound” offers credence to the idea that, from the onset of early industrialization to the present day, the dynamics of fertility can be represented by an N-shaped curve. An overlapping generations model with parental investment in human capital can account for these observed movements in fertility rates during the different stages of demographic change. A demographic transition with declining fertility emerges at the intermediate stage, when parents engage on a child quantity–quality trade-off. At later stages, however, the process of economic growth generates sufficient resources so that households can rear more children while still providing the desirable amount of education investment per child.     

A statistical model of speculative bubbles,with applications to the stock markets of the United States,Japan, and China

It is common knowledge that the more prices deviate from fundamentals, the more likely it is for prices to reverse. Taking this into account, we propose a simple statistical model to identify speculative bubbles in financial markets. Through the estimates of the time varying parameters, including transition probabilities, we can identify when and how newly born bubbles grow and burst over time. The model can be estimated by recursive computations, which require a huge storage capacity for standard computers. For this reason, we introduce an approximation in the computation, maintaining the recursive nature of our estimation technique. We then apply this model to the stock markets of the United States, Japan, and China, estimate its parameters and the probabilities of a bubble crash, and obtain several interesting results: the time series data of the stock price bubble show an inherently non-stationary development and the probability of a bubble crash indeed increases as the stock price becomes too high or too low.     

The effects of stringent capital requirements on large financial institutions

Journal of Regulatory Economics - With the growing size of the interbank financial market, it is often argued that capital regulations for large wholesale banks should be more stringent than for...     

The rise and fall of deficit in Japan, 1965–1990

This paper investigates the fifteen-year period when the Japanese government deficit (defined as the deficit bond issues to the general budget) rose sharply and shrank to zero. Our main contribution is to differentiate the budget “plan” and the “actual” (ex post) budget in order to distinguish intention and surprise. From 1976 to 1979, deficit bonds were considered to be deliberately increased, because of little surprise (deviations of actual from planned budget) in deficits for these years. The deficit ratio was brought down in the 1980s, mainly by freezing expenditures at the nominal level and waiting for bracket creeps in taxes to catch up. Beyond a trend increase in the 1970s and a trend decrease in the 1980s, the Japanese government acted to pursue a fiscal expenditure fine-tuning.     

Partially Binding Platforms: Campaign Promises vis‐à‐vis Cost of Betrayal

This study examines and models the effects of partially binding campaign platforms in a political competition. Here, a candidate who implements a policy that differs from the platform must pay a cost of betrayal, which increases with the size of the discrepancy. I also analyse endogenous decisions by citizens to run for an election. In particular, the model is able to show two implications that previous frameworks have had difficulty with. First, candidates with different characteristics have different probabilities of winning an election. Second, even knowing that he/she will lose an election, a candidate will still run, hoping to make an opponent's policy approach his/her own policy.     

Rational expectations and the effectiveness of monetary policy with special reference to the Barro-Fischer model

Monetary policy is sometimes alleged to be ineffective when the rational-expectations hypothesis is imposed on macroeconomic models. Barro and Fischer (1976) once presented in this journal a simple macroeconomic model in order to explain such a claim. However, their conclusion depends on a specific rule employed for the future course of money supply. It is shown that their model embodies an important factor which generally renders monetary policies effective, rational expectations notwithstanding. It is suggested that this property also holds in more general macroeconomic frameworks.