How the sound frequency of background music influences consumers’ perceptions and decision making

This study examined how music frequency affected consumers’ perception and decision making. The results of three experimental studies show that music frequency affects perceived distance between the sound source and the perceiver. Consequently, the representation of marketing message that matched (vs. mismatched) the background music's frequency enhanced consumers’ evaluative judgments. Specifically, Study 1A demonstrates that low‐frequency (vs. high‐frequency) music increased perceived distance. Studies 2, 3A, and 3B indicate that low‐frequency (high‐frequency) music matched products with abstract (concrete) representations and marketing messages signifying far (near) psychological distance. The congruency between psychological distance induced by music frequency and mental representations of products and message orientation offers a novel perspective on the notion of congruency. Moreover, Study 2 provides evidence that supports the congruency–fluency–evaluation chain (i.e., the mediating role of fluency), and Studies 3A and 3B show that the congruency has downstream effects. This study provides a theoretical contribution to the literature on the effects of music in marketing contexts by presenting convergent evidence that individuals exposed to low‐frequency (high‐frequency) music are inclined to construe a marketing message at a high (low) level.     

Effects of Lightness‐Location Congruency on Consumers’ Purchase Decision‐Making

A considerable body of psychological and neuroscientific research has demonstrated the existence of robust sensory correspondences between various features, attributes, or dimensions of experience in different sensory modalities. Despite findings indicating the importance of sensory correspondences to human information processing, research on purchase decision‐making has not to date focused sufficiently on this phenomenon. The present study examines how the lightness of packaging colors, and the location of products on a display shelf interact to affect consumers’ purchase decision‐making via perceived visual heaviness. As predicted, a display with light (dark) colored products positioned in the upper (lower) shelf positions increases shoppers’ perceptual fluency and facilitates their visual search, thus leading to the suggestion that “light” (heavy) locations are most appropriate for light (dark) colored products. Moreover, the lightness‐location congruent display is shown to influence people's choice behavior positively as well. This research also demonstrates that when consumers consider the lightness (in terms of their weight) of the products, they are more likely to choose light (vs. dark) colored products located in the upper shelf positions. These results therefore demonstrate that consumers’ purchase decision‐making may be promoted by in‐store environments designed to be congruent with their sensory correspondences.     

Bankruptcy dynamics in Japan

This paper attempts to enhance our understanding of macro aspects of bankruptcies in Japan. For this purpose, we estimate a vector autoregression comprised of three macroeconomic variables, two financial variables from the corporate sector and the bankruptcy rate, and construct its impulse responses. The estimation results generally show expected and consistent relationships between economic shocks and aggregate bankruptcies: in particular, a positive shock in the call rate clearly raises the bankruptcy rate. We also estimate industry-level models for manufacturing, construction, and wholesale and retail trade, the results of which show fundamental similarities, but differences as well, in the details by industry. We try to apply a standard framework for analysis aimed at establishing a clear benchmark for the study.     

Market competition,differences in technology,and productivity improvement: An empirical analysis based on Japanese manufacturing firm data

In this paper we examine empirically the effect of market competition on firm productivity improvements using data drawn from the Japanese manufacturing sector. We find that a non-linear relationship between competition and productivity growth induced by R&D activity as suggested by Aghion et al. (2005) holds for Japanese manufacturing firms. We also show that greater market competition widens technology differences across firms, and firms facing more intense competition are more productive than other firms. Our empirical results imply that productivity improvement through R&D activity depends on not only a competitive environment but also technological differences between firms.     

Residential rents and price rigidity: Micro structure and macro consequences

Why was the Japanese consumer price index for rents so stable even during the period of the housing bubble in the 1980s? To address this question, we use a unique micro price dataset which we have compiled from individual listings (or transactions) in a widely circulated real estate advertisement magazine. This dataset contains more than 700,000 listings of housing rents over the last 20 years. We start from the analysis of microeconomic rigidity and then investigate its implications for aggregate price dynamics, closely following the empirical strategy proposed by Caballero (Caballero and Engel, 2007). We find that 90% of the units in our dataset had no change in rents per year, indicating that rent stickiness is three times as high as in the United States. We also find that the probability of rent adjustment depends little on the deviation of the actual rent from its target level, suggesting that rent adjustments are not state-dependent but time-dependent. These two results indicate that both the intensive and extensive margins of rent adjustments are small, resulting in a slow response of the CPI for rent to aggregate shocks. We show that the CPI inflation rate would have been higher by 1% point during the bubble period, and lower by more than 1% point during the period following the burst of the bubble, if Japanese housing rents were as flexible as those in the United States.     

Endogenous innovation under New Keynesian dynamic stochastic general equilibrium model

This paper constructs an endogenous growth model using the framework of New Keynesian dynamic stochastic general equilibrium models. We incorporate the Schumpeterian approach that generates seemingly sticky prices and reinterpret the Calvo mechanism from the perspective of Bertrand competition and successful entrepreneurs. Our results demonstrate that both positive productivity shocks and endogenous innovation have a negative effect on subsequent endogenous innovation. These self-destructive effects of endogenous innovation might account for the IT productivity paradox and productivity slowdown seen in advanced countries. Furthermore, it is shown that there are both neutral and non-neutral properties of monetary policy shocks. They are neutral in terms of the growth effect, but non-neutral in terms of the level effect. In particular, expansionist monetary policies are desirable to facilitate endogenous innovation.     

Output-Inflation Trade-Off at Near-Zero Inflation Rates

The purpose of this paper is to provide new evidence about the cost of near-zero inflation using Japanese data. We test the hypothesis that the short-run Phillips curve becomes flatter as the rate of inflation approaches zero. In implementing the test, we pay special attention to how to control for other factors affecting the rate of inflation. First, we use the skewness of the distribution of relative-price changes as a measure of supply shocks. Second, we use information contained in the cross-prefecture Phillips curve to control for changes in the expected rate of inflation. Through a series of empirical analyses, we find evidences consistent with the hypothesis. In particular, we find that the estimated slope in the 1990s is smaller than before. J. Japan. Int. Econ., December 2000, 14(4), pp. 304–326. Research and Statistics Department, Bank of Japan and Institute of Economic Research, Hitotsubashi University. Copyright 2000 Academic Press.Journal of Economic Literature Classification Numbers: E31, E50     

Dynamics of quote and deal prices in the foreign exchange market

We empirically investigate price fluctuations of yen-dollar exchange rate using the high-frequency data recorded in the electronic broking system for seven-year period. The distribution of quote price changes has symmetric fat-tails approximated by a power law; however, that of deal price is asymmetrical. The autocorrelation function and diffusion of price changes indicate that quote price exhibits anti-correlation feature in short time scale, whereas deal price is essentially uncorrelated. The bid-ask spread shows power-law distribution and long range temporal correlations similar to that observed in absoute price changes.      

Advantages of backwardness and forwardness with shifting comparative advantage

This paper develops a multi-sector endogenous innovation model that is able to account for the dynamics of comparative advantage of each sector within the economy. The model in this paper assumes that two kinds of learning effects exist in R&D: advantages of backwardness and forwardness. It is shown that if the economy is divided into advanced and backward sectors, in the latter sectors, the advantage of backwardness dominates, leading to cyclic repetition of comparative advantage. However, in the former sectors, the advantage of forwardness becomes more significant, so comparative advantage among these sectors stabilizes. Thus, the direction of learning spillovers has a critical effect on the dynamics of comparative advantage. Given this result, it is shown that only R&D policies for the marginal sector are effective in facilitating economic growth. If a decision is made to facilitate R&D investment within advanced sectors, R&D taxes, rather than subsidies, should be imposed on this marginal sector. Moreover, it is shown that trade liberalization does not affect the intrinsic dynamics of comparative advantage among surviving sectors in the economy if the locus of this marginal sector does not change significantly after trade liberalization.