The productivity of public capital: Evidence from Japan’s 1994 electoral reform

This paper estimates the causal effect of public capital stock on Production, using Japanese prefectural data. We first articulate the difficulty of consistently estimating the regional-level production function with public capital that results from the endogeneity of the public capital stock amount. The public capital amount could be endogenous because of the central government’s political decision-making process of public capital allocation or the local government’s budgetary constraints.Japan’s electoral reform in 1994 offers an exogenous variation in the public capital investment across regions, and we exploit this event to estimate the causal effect of public capital on production. The reform drastically changed the distribution of political representation in the Lower House across regions, and it accordingly changed the allocation of public capital across regions as well. We cannot reject the null hypothesis that public capital is not productive based on the estimates from this natural experimental identification strategy.     

Scylla and Charybdis. Explaining Europe’s exit from gold, January 1928–December 1936

The paper examines the timing of exit from the interwar gold-exchange standard for a panel of European countries, based on monthly data over the period January 1928–December 1936. I show that exit from gold can be understood in terms of a trade-off between a limited set of factors commonly suggested in the theoretical literature on currency crises. A simple and parsimonious econometric framework that nests various hypotheses allows me to predict the month of exit in the 1930s, except for France. I consider the separate cases of France and Poland to show my results shed light on country-specific debates.     

Rise of the gold market in China: liberalisation and market development

The Chinese gold market is rapidly rising to global prominence in the recent decades. The paper reviews the history of the gold market in China and its liberalisation process amid the country’s opening to the outside world. Details of the current market structure and its main business are presented. Global impacts of the rise of the Chinese gold market are discussed.     

Economic return to political support: Evidence from voting on the representation of China in the United Nations

This study investigates the effect of political support in the United Nations on international trade by taking the votes on the representation of China from 1954 to 1971 as a case study. We document a strongly positive effect of political support toward the People's Republic of China on bilateral trade in the next year. This conclusion is robust when we consider different quantitative methods and sample selections. Two approaches are applied to address the potential endogeneity problem — estimates with the interest similarity with Albania as an instrumental variable and regressions with samples that changed voting attitude. Finally, we find that this positive effect is short-lived. Our empirical results indicate that political relations, reflected by political attitudes in the votes of the United Nations, exert explicit influence on bilateral economic exchange.     

Safeguards and voluntary export restraints under the World Trade Organization: The case of Japan's vegetable trade

Though the WTO agreement of safeguards prohibits VERs, WTO members can still use VERs without formal intergovernmental agreements. Our theoretical analysis shows that the fear of invoking a safeguard measure by an importing country on a good can induce a disruptive exporter of the good to enforce such a VER under certain conditions (for example, if the number of exporting country is not large). Our empirical analysis, using Japan's first safeguard actions as a case study, suggests that if producers of an exporting country capture an export market and if there is a large drop in their export price, the producers seeing a growing threat of safeguards will enforce such VERs. Our results highlight the need for amendments to the WTO Agreement on Safeguards.     

Electoral rules and free trade agreements as a campaign issue: The case of political disputes over the Trans-Pacific Partnership in Japan

This study empirically examines what drives candidates to oppose a free trade agreement (FTA), focusing on the difference in electoral rules and progress of FTA negotiations. We use as case studies Japan's 2013 and 2016 Upper House elections, a main issue of which was the Trans-Pacific Partnership (TPP). Candidates’ promises about the TPP are unrelated to whether they run for one-seat, multi-seat, or proportional representation constituencies. Candidates who have more rival candidates belonging to the same party are less supportive of the TPP, whereas candidates who face fiercer competition with rival candidates of other parties are more supportive. This result, however, is not observed after the conclusion of the TPP negotiations. The presence of agriculture in local economies relates to candidates’ opposition of the TPP before the conclusion of negotiations, but not thereafter. Conversely, candidates’ stances on the TPP are affected by their parties’ policies and own ideologies regardless of the different stages of promoting the TPP. These results indicate that the major determinants of candidates’ positions toward an FTA vary according to the changes in circumstances surrounding the FTA.     

Companies' insolvency and ‘the nature of the firm’ in Italy, 1920s–70s1

This article analyses the functioning of Italian insolvency laws and practices, in particular their role in the selection and relaunch of viable firms. The article investigates the period between the 1920s and the 1970s, and focuses on joint‐stock companies. Using comparative data on the number of cases, we show that in Italy firms mainly used the procedure called fallimento (bankruptcy), consisting of the collection and subsequent liquidation of assets. Other procedures, such as deals with creditors or forms of receivership, able to give companies a further chance, were rarely used. On the basis of archival documents we maintain that this result was due to the strictness and complication of Italian procedures, as well as to their inability to select viable companies. The article also investigates the relation between the features of insolvency law and the nature of the Italian industrial system, specifically the peculiar small size and rapid turnover of joint‐stock companies. We suggest that the pro‐liquidation character of the insolvency law might have been one of the causes of the peculiarity of Italian industrial capitalism, even if the opposite direction of causality cannot be excluded.     

The role of sentiment in the US economy: 1920 to 1934

This paper investigates the role of sentiment in the US economy from 1920 to 1934 using digitised articles from The Wall Street Journal. We derive a monthly sentiment index and use a 10-variable vector error correction model to identify sentiment shocks that are orthogonal to fundamentals. We show the timing and strength of these shocks and their resultant effects on the economy using historical decompositions. Intermittent impacts of up to 15 per cent on industrial production, 10 per cent on the S&P 500 and bank loans, and 37 basis points for the credit risk spread suggest a large role for sentiment.     

Exchange Rates and Economic Recovery in the 1930s: An Extension to Asia

Scholars have found a positive relationship between the magnitude of currency depreciation and the extent of recovery from the Great Depression for Europe and Latin America. The relationship between currency depreciation and economic activity during the Great Depression for Asian economies has not yet been explored. This paper examines this topic using data from 13 Asian economies: China, India, Indonesia, Iran, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Turkey, and Vietnam. We find that Asian economies responded in a similar way to currency depreciation during the Great Depression as did European and Latin American countries.     

Earnings Management in Response to the Introduction of the Australian Gold Tax*

Earnings from gold mining in Australia remained tax‐exempt for almost seven decades until January 1, 1991. In the early 1980s, rapid economic prosperity induced by escalated gold prices brought the Australian gold‐mining industry under intense political scrutiny. Using a variant of the modified Jones model, this paper provides evidence of significant downward earnings management by Australian gold‐mining firms, which is consistent with their attempts to mitigate political costs during the period from June 1985 to May 1988. In contrast, test of earnings management over a similar period in a control sample of Canadian gold‐mining firms produced insignificant results. Further, empirical results are robust to several sensitivity tests performed. During the period from June 1988 to December 1990, the Australian firms were found to have engaged in economic earnings management. This is consistent with the sample firms' incentive of maximizing economic earnings immediately prior to the introduction of income tax on gold mining. The findings of this study help to understand the impact of earnings management on the efficient resource allocation in an economy. They also contribute toward understanding the linkage between regulation of accounting for special purposes and general‐purpose financial reporting.     

Where there’s muck,there’s brass:1 the market for manure in the industrial revolution2

This article presents the first systematic analysis of off‐farm sources of nitrogen, such as urban and industrial waste, used in English agriculture during the industrial revolution, arguing that their use was widespread and intensive by 1700 and that there was only modest growth in their use up to 1840. It explains the pattern of use by supply and demand factors, and develops a new method to estimate the overall impact on wheat yields. It estimates that throughout the period 1700–1840 yields were 20 per cent higher than they would have been if no off‐farm manures had been used.     

The Norwegian debate on the gold standard and monetary integration in the 1870s

Abstract

The origin of the gold standard and the desire for monetary integration shared the same root, the prevailing liberal worldview of Norwegian elites. The actual timing of the final move, however, was strongly influenced by fear of foreign exchange volatility in the wake of the German monetary unification rather than the fear of inflation highlighted in earlier studies. The diminished prospect for a single “world money” after the Franco-Prussian war made monetary integration a dividing issue. In 1873, the attempt by the government to safeguard some of the advantages of integration by joining the Scandinavian Currency Union (SCU) was defeated by the parliamentary majority. The opposition was based both on a more optimistic view of the prospect of even further monetary integration and on fears of political opposition to Scandinavianism and the government. However, eighteen months later, parliament conceded and Norway joined the SCU.     

中国财政农业投入“悖论”探析

本文认为,同多数发展中国家一样,中国对农业的支持存在一个“悖论”,即财政对农业的投入与农业的贡献很不相称。文章基于政治经济学的视角,探讨了政府支持农业的“政治意愿”的影响因素。结果发现,农业从业人口份额对强化这种“政治意愿”具有积极影响,财力规模的扩张虽然增加了财政用于农业支出的绝对规模,但却并非提高财政用于农业支出份额的充分条件,尽快完善中国的民主政治制度,提高农业从业人口的政治参与能力是缓解财政农业投入“悖论”的内在要求。     

The “hidden” side of the “flying-geese” catch-up model: Japan’s dirigiste institutional setup and a deepening financial morass

Akamatsu’s original “flying geese” (FG) growth model is often used as a frame of reference for both further conceptual elaborations and empirical explorations. So far, only the positive results of FG development have been focused on and emphasized in connection with Asia’s phenomenal growth in the precrisis period. The Japanese economy, supposedly Asia’s lead goose, is in the eleventh consecutive year of stagnation. How has such a once successful lead goose come to be stricken by financial woes? This paper points out that Japan’s once miraculous FG growth was made possible because it established an effective dirigiste catch-up regime in the early postwar period but that Japan’s present financial predicament is paradoxically a path-dependent outcome of this FG strategy. The institutional, especially financial, dimension of FG strategy needs to be taken into account to explain why such a strategy once proved effective but later culminated in a deepening financial morass. The FG model should encompass not only the industrial dimension of catch-up but also its institutional, particularly financial, dimension.     

20世纪20-40年代典当业的衰落--以长江中下游地区为中心

典当业是旧中国传统借贷体系的重要组成部分，与广大平民百姓尤其是农民的经济生活有着十分密切的联系。但从民国时期特别是20世纪20至40年代的长江中下游地区可以看出，由于社会动荡不安、经济状况恶劣等因素的冲击，典当业已处于前所未有的衰落和危机之中，给普通百姓的金融借贷带来严重影响。为此，政府及社会各界提出了种种改革建议，颇值得深思。     

浅析90年代以来日本"流通革命"的原因

90年代以后日本流通业进入激烈变革时期，这种变革是二战以来的第二次流通革命。流通革命改变了日本流通体系和结构，流通企业和生产企业之间的重组日益流行，流通运营方式正在发生变化，因此流通革命将对日本经济产生重要影响。导致日本流通革命的原因很多，主要表现在价格破坏、定价体制改变、进口增加、购买方式变化、流通自由化、产销同盟和信息化等方面的原因。对这些原因及其背景的分析也反映了当今日本经济的概貌和面临的课题。     

Errata to “Gold shocks, liquidity, and the United States Economy during the National Banking Era” [Explor. Econ. Hist. 35 (1998) 381-404]

This note draws attention to an important data error that is at the center of our paper “Gold Shocks, Liquidity, and the United States Economy during the National Banking Era” (this journal 1998). The gold stock series we used was compiled from the annual reports of the US Treasury, which contains a large drop between May and June, 1907. This drop was an error. We redo our original statistical work with a revised series. Our results are robust to the new gold stock series.     

Japanese aggregate import demand function: reassessment from the ‘bounds’ testing approach

This paper aims to ascertain the long-run relationship of Japanese aggregate import demand function over the period 1973–1997. The cointegration test used, bounds test procedure [J. Appl. Econ. 16 (2001) 289] is a recent test that based on the estimation of an unrestricted error-correction model (UECM). In contrary with previous studies [J. Policy Model. 16 (1994) 291; Jpn. World Econ. 13 (2001) 135], the bounds test confirms a long-run equilibrium relationship between quantity of imports, and its determinants namely real income and relative prices term. The estimated long-run income and price elasticities are 0.99 and −0.82, respectively.