Japanese money demand: evidence from regional monthly data

This study estimates the Japanese money demand function by household using seasonally adjusted panel data following Fujiki and Mulligan (Monetary and Economic Studies, Bank of Japan, vol. 14(1–2), 1996a, 1996b, pp. 65–103, 53–78). The most plausible estimates of the income elasticity of money demand are in the range from 1.28 to 1.35 for the period from 1990 to 1995. These results are robust with respect to the choice of scale variables, and consistent with the estimates based on seasonally unadjusted monthly data and annual data. The stable relationship obtained from regional panel data provides useful information with which to judge the stability of the money demand function for the central bankers.     

Price expectations and consumption under deflation: evidence from Japanese household survey data

The Japanese economy has experienced price deflation since the mid-1990s. Despite the importance of overcoming deflation, there has been little recent research on price expectations in Japan. This paper takes advantage of an original and rich quarterly household-level data set from the “Kokumin Seikatsu Monitors” to estimate average price expectations, examine the factors that affect price expectations, and examine how changes in price expectations have affected household consumption. Our estimates indicate that average price expectations ranged from minus 0.2 to 0% in 2001 and 2002. However, there was an increase to 1% in the first quarter of 2003, followed by a decline to 0.2% in the second quarter, and a steady increase toward 0.8% by the first quarter of 2004. Price expectations depend on current price movements and lagged expectations. A series of quantitative easing monetary policies were not very effective in changing the price expectations, since the policy announcements caused revision of price expectations only for a small portion, i.e., 5–10% of people surveyed. The jump observed in the first quarter of 2003 was a reaction to the outbreak of the Iraq war. Our study also confirms that deflationary expectations discourage household consumption, mainly durable consumption, by delaying the timing of purchases, suggesting that the deflationary expectations should be upwardly revised to restore a vital Japanese economy.     

后危机时代下的贸易保护主义及应对

后危机时代下的全球商品贸易呈现复苏态势。但全球贸易保护主义将长期伴随世界经济复苏之路。抵制贸易保护、维持开放的贸易和投资体制,有助于世界经济的稳定复苏和持续增长。     

Trade openness and air pollution: City-level empirical evidence from China

We seek to contribute to the debate over trade openness and the environment by taking specific account of the endogeneity of trade openness. We use exogenous geographic determinants of trade as instrumental variables as well as distance to Huai River for identification which is based on China's heating policy. Using air quality measure from NASA, we find that trade increases three measures of air pollution: SO₂, NO₂, and Aerosol concentration.     

Renminbi exchange rate exposure: evidence from Chinese industries

This paper investigates sensitivity of stock returns of industry-sorted Chinese firms with respect to renminbi exchange rate movements. Strong evidence of significant exposure is documented for 7 out of 16 Chinese industries. Evidence is also found of the size asymmetry effects. In addition, we explore the characteristics of the exposure, and detect evidence of significant exposure among non-exporters in some of the industries. Special attention is given to examining the time-varying exposure under the impact of the new Chinese exchange rate regime in place since 2005, in which even stronger exchange rate exposure is reported. The conditional exposure estimated in this paper also reveals the close relation between stock returns and changes of the renminbi exchange rate.     

Trade policy substitution: theory and evidence

Review of World Economics - With the help of a political economy model, we show that the extent of ‘trade policy substitution’—namely, substitution of tariffs with non-tariff...     

Measuring economic localization: Evidence from Japanese firm-level data

This paper examines location patterns of Japan’s manufacturing industries using a unique firm-level dataset on the geographic location of firms. Following the point-pattern approach proposed by Duranton and Overman (2005), we find the following. First, about half of Japan’s manufacturing industries can be classified as localized and the number of localized industries is largest for a distance level of 40 km or less. Second, several industries in the textile mill products sector are among the most localized, which is similar to findings for the UK, suggesting that there exist common factors across countries determining the concentration of industrial activities. Third, the distribution of distances between entrant (exiting) firms and remaining firms is, in most industries, not significantly different from a random distribution. These results suggest that most industries in Japan neither become more localized nor more dispersed over time and are in line with similar findings by Duranton and Overman (2008) for the UK. Fourth, a comparison with the service sector indicates that the share of localized industries is higher in manufacturing than in services, although the extent of localization among the most localized manufacturing industries is smaller than that among the most localized service industries, including financial service industries.     

Trade protection and market power: evidence from US antidumping and countervailing duties

Contingent protection measures were originally intended to protect domestic producers from what were considered to be “unfairly” cheap imports. However, due to the way in which these policies are designed and implemented, they have been heavily criticised for their greatly disruptive effects on markets, and particularly on competition. The analysis presented in this paper contributes to the debate by studying the impact of US antidumping (AD) and countervailing (CV) duties on domestic producers’ price-cost margins (PCM). To this end, the study takes advantage of a long panel of 4-digit industries in the United States covering 26 years of AD/CV activity, including the periods before and after the changes to AD/CV laws introduced following the Uruguay Round (UR). It finds evidence of a positive effect of AD/CV duties on PCM for the period prior to the UR, but the effect seems to disappear in the years following the UR. The analysis accounts for potential endogeneity in AD/CV duties, as well as the intensity of the protection granted.     

Trade openness, real exchange rates and job reallocation: evidence from Belgium

This paper investigates the impact of real exchange rate movements on job reallocation at the industry level. The analysis focuses on the manufacturing sector of Belgium, using data for 82 NACE 3-digit industries, over the time span 1996–2002. I find that real exchange rate changes do have a significant impact on job flows, and that this impact is magnified by increasing levels of trade exposure. In particular, a real appreciation is found to lower net employment growth through higher job destruction, while job creation is not significantly affected. These results are in line with previous empirical evidence on the United States, and differ from earlier findings for France and Germany, where the adjustment to real exchange rate shocks has been found to occur mainly through the job creation margin. I suggest that these differences may be explained by the fact that Belgium is a small open economy.     

Trade creation and the status of FTAs: empirical evidence from East Asia

East Asia has been considered a latecomer with respect to Free Trade Agreements (FTAs). Since the turn of the last century, however, FTAs with East Asian participation have seen an intra- and extra-regional expansion. Many trade initiatives have been proposed, negotiated or even implemented. This introduces interesting perspectives for the analysis of trade agreements regarding their anticipatory trade effects. This paper focuses on the trade impact of FTAs at different stages that East Asian economies participate in. The central part of this study is an econometric analysis that applies panel data to the gravity model of international trade flows. We augment the traditional model with variables to estimate trade effects of bilateral and multilateral agreements and year-to-year changes in the stages of their implementation. Our results reveal that there exist anticipatory effects preceding the actual implementation of bilateral FTAs with East Asian participation. Further, anticipation effects are larger for bilateral than for multilateral agreements, possibly because the realisation of bilateral agreements is considered more realistic.     

Bribery in Indonesia: some evidence from micro-level data

This paper outlines and tests a model in which firms seek to reduce the cost of taxes and regulatory compliance by offering bribes to government officials. It finds that firms' profitability (scaled by production costs) largely determines both the amounts paid and the time spent negotiating bribes with officials. Competition between arms of the bureaucracy for bribe income seems to be a result of decentralisation, but the analysis suggests that this competition would lead to a spreading of bribes among a larger number of officials rather than to a significant increase in their total amount. Local governments may be able to raise more revenue by reducing the number of taxes and regulations and using part of the increased revenue to raise the salaries of officials, while devoting more effort to restraining corrupt behaviour. But progress may be blocked by central government tax officials increasing their demands for bribes.     

Income inequality and subjective wellbeing: Panel data evidence from China

Using four waves of longitudinal data from the China Family Panel Studies (CFPS), we examine the effects of income inequality on subjective wellbeing (SWB). We take a dual approach in measuring income inequality, and thus, we examine the effects of inequality using province-level Gini coefficient as well as between-group inequality or identity-related inequality defined as the income gap between migrants without urban household registration identity (hukou) and urban residents. We find negative effects of both province-level income inequality and between-group income inequality on SWB, measured by life satisfaction. Our results also show that the effects of income inequality on SWB is stronger for rural hukou residents compared to urban hukou residents. These findings are robust to alternative ways of measuring SWB and income inequality. In addition, we find evidence suggesting that neighbourhood trust is an important channel through which income inequality operates to reduce SWB. We suggest policies that promote trust in communities with high inequality with a view of addressing the negative effects of inequality on SWB.     

Exchange rate exposure of sectoral returns and volatilities: Evidence from Japanese industrial sectors

Most studies of exchange rate exposure of stock returns do not address three relevant aspects simultaneously. They are, namely: sensitivity of stock returns to exchange rate changes; sensitivity of volatility of stock returns to volatility of changes in foreign exchange market; and the correlation between volatilities of stock returns and exchange rate changes. In this paper, we employ a bivariate GJR-GARCH model to examine all such aspects of exchange rate exposure of sectoral indexes in Japanese industries. Based on a sample data of fourteen sectors, we find significant evidence of exposed returns and its asymmetric conditional volatility of exchange rate exposure. In addition, returns in many sectors are correlated with those of exchange rate changes. We also find support for the “averaged-out exposure and asymmetries” argument. Our findings have direct implications for practitioners in formulating investment decisions and currency hedging strategies.     

Individual preferences on trade liberalization: evidence from a Japanese household survey

This paper studies an individual’s preference on trade liberalization using a Japanese household survey, the Keio Household Panel Survey. As a result, we show that preferences toward trade liberalization are affected by economic factors (income, gender, family, asset, and job status) as well as noneconomic factors (noncognitive factors and behaviroal biases). We find that male, educated, and people with smaller family prefer trade liberalization. Furthermore, people who prefer liberty to equality and have less local patriotism, tend to be positive to trade liberalization.

     

Foreign direct investment-led growth: evidence from time series and panel data

This paper estimates the impact of foreign direct investment(FDI) on capital accumulation, and output and total factor productivity(TFP) growth in the recipient economy. Time series and paneldata evidence are provided for a sample of OECD and non-OECDcountries in the period 1970-90. Although FDI is expected toboost long-run growth in the recipient economy via technologicalupgrading and knowledge spillovers, it is shown that the extentto which FDI is growth-enhancing depends on the degree of complementarityand substitution between FDI and domestic investment.     

Time zones and German exports: first evidence from firm-product level data

Review of World Economics - This paper uses a tailor-made new data set of 3,390,871 observations for German exports to non-EU countries at the firm-product-destination level in 2011 to investigate...     

Regional specialization and shocks in Europe: Some evidence from regional data

Regional Specialization and Shocks in Europe: Some Evidence from Regional Data. —The authors address the issue of the European Monetary Union (EMU), focusing on a comparison between EC countries and EC regions. They identify a number of homogeneous economic regions and show that in the period 1978–1989 asymmetric shocks in Europe have been regional rather than national. This derives from the fact that regional specialization in Europe is strongly diversified. They argue that cross-border regional diversification can cushion the net effects of differentiated sectoral shocks, reducing national instability. In addition, the costs of EMU associated with the loss of the exchange rate are likely to be smaller than usually thought.     

Heterogeneity in lending and sectoral growth: evidence from German bank-level data

This paper investigates whether heterogeneity across firms and banks matters for the impact of domestic sectoral growth on bank lending. We use several bank-level datasets provided by the Deutsche Bundesbank for the 1996–2002 period. Our results show that firm heterogeneity and bank heterogeneity affect how lending responds to domestic sectoral growth. We document that banks’ total lending to German firms reacts pro-cyclically to domestic sectoral growth, while lending exceeding a threshold of €1.5 million to German and foreign firms does not. Moreover, we document that the response of lending depends on bank characteristics such as the banking groups, the banks’ asset size, and the degree of sectoral specialization. We find that total domestic lending by savings banks and credit cooperatives (including their regional institutions), smaller banks, and banks that are highly specialized in specific sectors responds positively and, in relevant cases, more strongly to domestic sectoral growth.

Indexation and household saving behavior: Some empirical evidence from finnish data

Zusammenfassung Indexierung und das Sparverhalten der privaten Haushalte: Empirische Evidenz aus Finnland. - In diesem Aufsatz werden finnische Daten über indexierte Depositenkonten benutzt, um die Wirkungen der Indexierung auf das Sparverhalten der privaten Haushalte empirisch zu belegen. Die Ergebnisse best?tigen, da\ bei Unsicherheit über die Inflationsrate die Absicherungsmóglichkeit einer voll indexierten Finanzanlage dazu führt, da\ sich der Anteil der indexierten Anlage am gesamten Sparkapital vergró\ert. Diese Folgerung scheint ziemlich stabil zu sein gegenüber verschiedenen N?herungswerten für das private Vermógen, Modifikationen des Grundmodells und der Sch?tzmethoden. W?hrend die Indexierung das Banksparen positiv beeinflu\t hat, konnte kein me\barer Einflu\ auf die Sparquote insgesamt nachgewiesen werden.

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Résumé Indexation et le comportement d’épargne des ménages: Quelque évidence empirique des données finnoises. - Dans cet article des données finnoises concernant des comptes de dépót indexés sont utilisées pour trouver l’évidence empirique sur les effets de l’indexation sur le comportement d’épargne des ménages. Les résultats supportent la vue que la ?hedging? capabilité d’un actif complètement indexé favorise en présence de l’incertitude sur le taux d’inflation l’actif indexé. Cette conclusion semble être assez robuste après qu’ on a utilisé d’autres variables approximatives pour la richesse de ménage et modifié le modèle de base et les méthodes d’estimation. Pendant que l’indexation a fait monter la portion de l’épargne bancaire, il n’y a pas d’effet mesurable sur l’épargne total.

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Resumen Indexación y ahorro de los hogares: evidencia empírica de datos finlandeses. - En este trabajo se utilizan datos de Finlandia sobre depósitos bancarios indizados para obtener evidencia empírica de los efectos de la indexación sobre el ahorro los hogares. Los resultados confirman la noción de que la capacidad de “hedging” de un activo integramente indizado bajo condiciones de inflación incierta causa una realocación através de una demanda de ?hedging? en favor de una parte mayor del activo indizado. Esta conclusión parece bastante robusta con respecto a las ?proxies? para el patrimonio de los hogares, modificaciones del modelo básico y los métodos de estimación. Los resultados empíricos con respecto al efecto sobre la cuota de ahorro no revelaron ning?n impacto mensurable. El ahorro bancario, por otro lado, resultó afectado positivamente.