An adjustment cost model of long-term employment in Japan

A dynamic factor demand model is presented which pays special attention to the prevalence of a long-term employment relationship in Japan. The model is based on the representation of technology by a variable cost function with adjustment costs for employment and capital stock, where the variable cost consists of the sum of overtime costs and materials costs. With employment being quasi-fixed and scheduled hours institutionally regulated, short-run adjustments are mostly made by overtime hours. Application to a time-series data on the Japanese electrical machinery industry indicates quasi-fixity of capital and employment and reproduces short-run overshooting of overtime hours to compensate for the sluggish adjustment of employment.     

TECHNICAL PROGRAESS AND INVESTMENT: A VINTAGE MODEL*

The main purpose of this paper is to investigate the optimal investment decision of the firm with a vintage production function. First, the optimal conditions for the investment and replacement permitting jumps in the state variables are derived. Second the effects of exogenous parameters on investment are examined and the following new results are obtained: (1) whether a rise in the current money wage increases or decreases investment depends crucially on the time profile of the existing plants; (2) a rise in the rate of technical progress reduces investment.     

Agglomeration economies in urban manufacturing industries: A case of Japanese cities

The effects of urban agglomeration economies on productivities in two-digit manufacturing industries is estimated using the cross section data of Japanese cities in 1979. Urbanization and localization economies, which are major forms of urban agglomeration economies, are explicitly separated. The estimates of these economies vary considerably among industries. Light industries receive more productive advantages from urbanization economies than from localization economies, but heavy industries experience these economies more from localization economies than from urbanization economies.     

Introduction: New directions in Information and Screening in Real Estate Finance

Conclusion The evidence presented in this special issue supports the view that preexisting information held by mortgage lenders plays an important role in mortgage approvals. This argues for mortgage lending programs that make efficient use of lender information, and it supports the importance of local financial intermediaries for lending. It also suggests that mortgage finance is an important element in turning transitory shocks into persistent ones that shape macroeconomic and regional business cycles.This Journal has from its inception, with the publication of a seminal article on information and incentives on mortgage contract terms by Dunn and Spart (1988), pushed forward the frontier of knowledge on information issues in real estate finance. This special issue presents empirical evidence on the importance of this aspect of mortgages.     

On the impact of the tests for serial correlation upon the test of significance for the regression coefficient

Monte Carlo methods are used to investigate the relationship between the power of different pretests for autocorrelation, and the Type I error and power of the significance test for a resulting two-stage estimate of the slope parameter in a simple regression. Our results suggest it may be preferable to always transform without pretesting. Moreover we find little room for improvement in the Type I errors and power of two-stage estimators using existing pretests for autocorrelation, compared with the results obtained given perfect knowledge about when to transform (i.e., given a perfect pretest). Rather, researchers should seek better estimators of the transformation parameter itself.     

Endogenous Market Structures in the Presence of a Socially Responsible Firm

We consider the endogenous selection of strategic contracts in an asymmetric duopoly with substitutable goods. the duopoly comprises a typical managerial firm with a sales delegation and a socially responsible firm (CSR firm) with a linear combination of social welfare and quantity as its managerial delegation contract. In particular, we examine how the equilibrium market structure changes from the case wthere both firms adopt sales delegation contracts to the case wthere one of the firms becomes a CSR firm, after the owners of the firms select their strategic contracts. We show that two market structures that are asymmetric with respect to their strategic contracts can become equilibrium market structures under the pure strategic contract class. Furthermore, we consider a unique mixed strategy equilibrium to examine how the risk domination between the two asymmetric equilibrium market structures affects equilibrium selection. there, we find that the competition wthere the firm with the sales delegation and the CSR firm have a price contract and a quantity contract, respectively, risk-dominates the competition wthere the firms have a quantity contract and a price contract, respectively. Finally, by deriving the order of social welfare among the four subgames, we show that the social incentive does not coincide with the private incentive in the robust equilibrium with respect to risk domination in the endogenous selection game of the strategic contracts of the asymmetric duopoly with the firm with a sales delegation and the CSR firm.