Fiscal policy switching in Japan, the US, and the UK

This paper estimates fiscal policy feedback rules in Japan, the United States, and the United Kingdom for more than a century, allowing for stochastic regime changes. Estimating a Markov-switching model by the Bayesian method, we find the following: First, the Japanese data clearly reject the view that the fiscal policy regime is fixed, i.e., that the Japanese government adopted a Ricardian or a non-Ricardian regime throughout the entire period. Instead, our results indicate a stochastic switch of the debt-GDP ratio between stationary and nonstationary processes, and thus a stochastic switch between Ricardian and non-Ricardian regimes. Second, our simulation exercises using the estimated parameters and transition probabilities do not necessarily reject the possibility that the debt-GDP ratio may be nonstationary even in the long run (i.e., globally nonstationary). Third, the Japanese result is in sharp contrast with the results for the US and the UK which indicate that in these countries the government’s fiscal behavior is consistently characterized by Ricardian policy.     

Value Co-Creation in Business-to-Business and Business-to-Consumer Service Relationships

Abstract

The purpose of this study is to examine the interrelationships among value co-creation, switching costs (SC), and customer share (CS) in both business-to-business (B2B) and business-to-consumer (B2C) relationships. In spite of increasing attention to value co-creation in the Service Dominant Logic, there are only a limited number of empirical studies on this concept. Furthermore, few researchers have investigated the inter-relationship among value co-creation, SC, and CS in a single framework for both B2B and B2C relationships, although many enterprises serve both types of customers. The conceptual framework is developed primarily based on relationship marketing and services marketing. This study evaluates six hypotheses, analyzing survey data from 209 enterprises and 337 individuals by structural equation modeling (SEM). Further, confirmatory factor analysis (CFA) is conducted to confirm the convergent validity and discriminant validity. In conclusion, the positive impact of execution of value co-creation (EVC) activities on SC and CS is supported with appropriate statistical evidence in both B2B and B2C relationships. Also, the causal relationship between values in relational exchanges (VRE) and CS is confirmed with adequate empirical findings for both relationships. These results suggest to marketing managers that service firms may achieve larger CS by executing value co-creation activities and providing VRE for customers.     

Ministerial Weights and Government Formation: Estimation Using a Bargaining Model

This article proposes a method to estimate relative ministerialweights in parliamentary democracies. Specifically, we presenta bargaining model of government formation and estimate structuralparameters of the model using data for (i) who the formateursare, (ii) what each party's voting weight is, and (iii) whatministerial seats each party obtains. We also measure the effectsof voting weights and formateur advantage on bargaining results.We apply our proposed method to the case of Japan. Our estimationresults show that political players value pork-related posts(such as the Minister of Construction) much more than prestigiousones (such as the Minister of Foreign Affairs). We also findthat there is a significant formateur advantage, whereas votingweights do not have a significant scale effect, which is consistentwith the findings for European democracies.     

Applications of Gram–Charlier expansion and bond moments for pricing of interest rates and credit risk

The purpose of this paper is to demonstrate the powerful and flexible applicability of the Gram–Charlier expansion to pricing of a wide variety of interest rate related products involving interest rate risk and credit risk. In this paper, we develop easily implemented approximations of the prices of several derivatives; swaptions, CMS, CMS options, and vulnerable options. Associated with the default risk, a survival contingent forward measure is constructed.     

Potential for visual communications technology in business

The authors describe the methodology used in a survey conducted by NTT to assess the potential of visual communications technology in business and the conclusions drawn. Communications activities were investigated in detail at a selected manufacturing company, and several fundamental communication patterns suitable for the application of visual communications services were defined. It was concluded that the areas with the greatest potential for such services were ‘investigation/ inquiry’, ‘negotiation’, and ‘submitting information’. To confirm these needs, a questionnaire was mailed to major corporations throughout Japan. Finally, several services and systems were proposed.     

A quantitative appraisal of national economic policy

Zusammenfassung Eine quantitative Bewertung der Volkswirtschaftspolitik. Der Fall Japan. — Der Zweck des vorliegenden Aufsatzes besteht darin, die vorl?ufigen Ergebnisse einer quantitativen Analyse der Wirtschaftspolitik für Japan vorzulegen, die aus einem Modell für eine kurzfristige ?konomische Vorausschau entwickelt wurden. Zun?chst wurde ein Lohn-Preis-Spirale-Mechanismus in die Gleichungen eingeführt. Zweitens wurden Identit?tsgleichungen sowohl in laufenden Preisen als auch in realen Werten aufgestellt, um wirtschaftspolitisch orientierte Experimente zu erleichtern, da die meisten Variablen der Wirtschaftspolitik in laufenden Preisen ausgedrückt sind. Drittens wurden die durchschnittlichen Zinss?tze für Kredite aller Handelsbanken, die durch den Diskontsatz der Bank von Japan reguliert werden, ebenso wie das j?hrliche Verh?ltnis zwischen den laufenden Posten der Zahlungsbilanz zum Bruttosozialprodukt als Schlüsselvariable für wirtschaftspolitische Experimente berücksichtigt und als erkl?rende Variable in die Gleichungen sowohl für die Bildung von privatem Anlagekapital als auch für die Schwankungen bei der nichtlandwirtschaftlichen Lagerhaltung eingeführt. Au\erdem wurde die Kapazit?tsausnutzungsindex-Variable eingeführt, die aus den sektoralen Produktionsindizes durch Anwendung der Wharton-School-Methode gebildet wurde. Die systematische Ann?herung an das Problem der quantitativen Bewertung der Wirtschaftspolitik beruht auf einem ?konomischen Modell, das folgende drei Methoden verwendet: 1. Die Multiplikatoranalyse, 2. Simulationsexperimente und 3. einen Durchführbarkeitstest (feasibility test). Die Ergebnisse dieser Methoden werden dargestellt, und zum Schlu\- werden die Resultate des ?feasibility tests? diskutiert.

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Résumé Une évaluation quantitative de la politique économique nationale. Le cas du Japon. — Cet article présente les résultats de première tentative d’une analyse économique quantitative de la politique économique du Japon, résultats provenant d’un modèle de prévision économique à court terme. On a d’abord introduit dans les équations un mécanisme de spirale salaires-prix. Puis, on a pris en considération les identités exprimées en valeurs courantes aussi bien qu’en valeurs réelles, afin de faciliter les expériments de politique économique, puisque la plupart des variables de politique économique sont spécifiées par les valeurs courantes. Troisièmement, le taux moyen d’intérêt sur les prêts de toutes les banques commerciales — réglé par le taux d’escompte de la banque centrale — ainsi que la relation annuelle entre le compte courant de la balance des paiements et le produit national brut ont été considérés comme les variables principales dans les expériments de politique économique. Ils ont donc été introduits comme variables explicatives dans les équations relatives aux formations de capital fixe privé aussi bien qu’aux changements dans les inventaires non-agricoles. On a introduit également comme variable l’indice de l’utilisation de la capacité, qui fut calculé d’après les indices des secteurs de production, en utilisant la méthode Wharton School. En abordant systématiquement le problème d’une évaluation quantitative de la politique économique nationale, tout en se basant sur un modèle économétrique, on se sert des trois techniques suivantes: 1. analyse du multiplicateur, 2. expériments simulés, 3. épreuve de praticabilité (feasibility test). Les résultats de l’application de ces techniques sont présentés et, finalement, les résultats de l’épreuve de praticabilité sont discutés.

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Resumen Una evaluaci?n cuantitativa de la política económica. El caso del Japón. — El objetivo del presente ensayo consiste en presentar los resultados provisionales de un anál isis cuantitativo de la política económica del Japón, realizado por medio de un modelo de prognóstico a corto plazo. En primer lugar, se introdujo el mecanismo de la espiral salario-precio en el sistema de ecuaciones. A continuatión, se escribieron ecuaciones de identidad con precios tanto corrientes como constantes, para facilitar, en vista de que la mayória de las variables de la política económica viene expresada en precios corrientes, la realización de experimentos pol’tico-económicos. Luego, se introdujeron como variables clave para experimentos politico-económicos y como variables explicativas de la formatión de capital fijo privado y de las fluctuaciones en los stocks no agrarios, el tipo medio de interés para créditos de la banca comercial, que queda regulado por la tasa de descuento del Banco de Japón, así como la relación anual entre las operaciones corrientes de la balanza de pagos y el producto nacional bruto. Además, se introdujo como variable el indice de utilización de la capacidad productiva, que se calculó por el método de la ?Wharton School?, partiendo de indices de producción sectorales. La aproximacíón sistemática al problema de evaluación cuantitativa de la política económica se efectúa a través de un modelo, en el que se emplean très métodos, a saber: 1. el análisis del multiplicador, 2. experimentos de simulación, y 3. una prueba de viabilidad (feasibility test). Se presentan los resultados de estos métodos y se discuten, finalmente, los resultados del ?feasibility test?.

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Riassunto Una valutazione quantitativa delia politica economica. Il caso Giappone. — Lo scopo del presente saggio consiste nel presentare i risultati provvisori di un’analisi quantitativa della politica economica per il Giappone che furono ricavati da un modello per una previsione economica a breve termine. In un primo momento fu introdotto nelle equazioni un meccanismo spirale salari-prezzi. In secondo luogo furono poste equazioni d’identità tanto nei prezzi correnti che nei valori reali per facilitare esperimenti politici orientati in senso politico-economico; infatti la maggior parte delle variabili della politica econ?mica sono espressi in prezzi correnti. In terzo luogo furono presi in considerazione i tassi medi d’interesse per crediti di tutte le banche commerciali i quali sono regolati mediante il tasso di sconto della Banca del Giappone, altrettanto come la relazione annuale tra le partite correnti della bilancia di pagamento per il reddito nazionale lordo come variabile chiave per esperimenti politico-economici e furono introdotti come variabile esplicativa nelle equazioni tanto per la formazione di capitale d’investimento privato che per le fiuttuàzioni nel magazzinaggio non agricole Inoltre fu introdotta la variabile indice di capacità di utilizzazione che si formò dagli indici settoriali di produzione mediante l’applicazione del metodo Wharton-School. L’avvicinamento sistematico al problema della valutazione quantitativa della politica economica si basa su un modello economico che impiega i tre seguenti metodi: 1) l’analisi moltiplicatrice, 2) esperimenti di simulazione e 3) un test di eseguibilità (feasibility test). I risultati di questi metodi sono descritti ed alla fine sono discussi i risultati del ?feasibility test?.

     

Are Depositors Aware of the Governance of their Banks?1

In the discussion of corporate governance from the standpoint of economists, it is common for economists to pay more attention to the stockholders of a corporation (as stakeholders) than to the creditors. However, the behaviors of depositors as creditors should not be neglected in the management of banking institutions. The purpose of this paper is to analyze statistically the decision factors of depositors in opening an account at a particular bank with respect to corporate governance variables. My result shows that depositors with risk aversion consider banks well managed based on the following: a lower rate of external auditors, a longer time of service by the bank’s president, and the existence of a simultaneous promotion system of the bank’s president and chairperson.     

A choice of auction format in seller cheating: a signaling game analysis

In this paper, we examine which auction format, first-price or second-price, a seller will choose when he can profitably cheat in a second price auction by observing all bids by possible buyers and submitting a shill bid as pretending to be a buyer. We model this choice of auction format in seller cheating as a signaling game in which the buyers may regard the selection of a second price auction by the seller as a signal that he is a shill bidder. By introducing trembling-hand perfectness as a refinement of signaling equilibrium, we find two possible strictly perfect signaling equilibria. One is a separating equilibrium in which a noncheating honest seller selects a first price auction and a cheating seller does a second price auction. In another pooling equilibrium, however, both cheating and non-cheating sellers select a second price auction. The conclusion that a seller chooses a second price auction even if he cannot cheat is in contrast to the previous literature, which focused on the case of independent values. We thank an anonymous referee for useful comments that have improved the paper. This research was partially supported by the Ministry of Education, Science, Sports and Culture, Grant-in-Aid for Scientific Research (B) 15310023 and (C) 18530139.