Interim efficient allocations under uncertainty

This paper considers an exchange economy under uncertainty with asymmetric information. Uncertainty is represented by multiple priors and posteriors of agents who have either Bewley's incomplete preferences or Gilboa-Schmeidler's maximin expected utility preferences. The main results characterize interim efficient allocations under uncertainty; that is, they provide conditions on the sets of posteriors, thus implicitly on the way how agents update the sets of priors, for non-existence of a trade which makes all agents better off at any realization of private information. For agents with the incomplete preferences, the condition is necessary and sufficient, but for agents with the maximin expected utility preferences, the condition is sufficient only. A couple of necessary conditions for the latter case are provided.     

Testing Low-Balling Strategy in Rural Road Procurement

A “low-balling strategy” by bidding contractors has increasingly been recognized as an important issue in public infrastructure procurement. Public works contracts are often imperfect and renegotiated after the contract award. Given the expectation for ex post adjustments, bidders seem motivated to take advantage of the low-balling strategy. This paper analyzes the endogeneity between the bid strategy and ex post adjustments. Using procurement data on rural road projects in Nepal, it shows that the bid strategy and adjustments are determined endogenously in the system. Anticipating cost and time overruns, firms would likely undercut normal bid prices. Then, ex post contract adjustments actually happen, because of their too aggressive bids.     

Japan's fiscal policy and fiscal reconstruction

This paper investigates the macroeconomic effects of fiscal policy and the fiscal reconstruction movement in Japan. We first summarize Japan's fiscal policy in recent years and discuss advantages and disadvantages of government deficits. Next, we investigate the macroeconomic effects of Japanese fiscal policy and evaluate the plausibility of non-Keynesian effects. We also analyze the possibility of the crowding-in effect of fiscal policy and investigate the spillover effects of deregulation. Finally, we discuss political constraints in the fiscal reconstruction attempts and propose some measures for successful fiscal reforms in the near future.     

Information criteria for impulse response function matching estimation of DSGE models

We propose new information criteria for impulse response function matching estimators (IRFMEs). These estimators yield sampling distributions of the structural parameters of dynamic stochastic general equilibrium (DSGE) models by minimizing the distance between sample and theoretical impulse responses. First, we propose an information criterion to select only the responses that produce consistent estimates of the true but unknown structural parameters: the Valid Impulse Response Selection Criterion (VIRSC). The criterion is especially useful for mis-specified models. Second, we propose a criterion to select the impulse responses that are most informative about DSGE model parameters: the Relevant Impulse Response Selection Criterion (RIRSC). These criteria can be used in combination to select the subset of valid impulse response functions with minimal dimension that yields asymptotically efficient estimators. The criteria are general enough to apply to impulse responses estimated by VARs, local projections, and simulation methods. We show that the use of our criteria significantly affects estimates and inference about key parameters of two well-known new Keynesian DSGE models. Monte Carlo evidence indicates that the criteria yield gains in terms of finite sample bias as well as offering tests statistics whose behavior is better approximated by the first order asymptotic theory. Thus, our criteria improve existing methods used to implement IRFMEs.     

Testing for the principal’s monopsony power in agency contracts

We develop a test for the presence of the monopsony power of the livestock integrator (principal) on the market for contract growers (agents) and estimate the model with the data on swine industry contract settlements. A natural test for the monopsony power of the principal would compare the estimated values of the marginal revenue products with the actual payments that agents receive for their services. The problem with implementing this approach comes from the fact that agents’ abilities and actions are unobservable. Our approach is based on estimating the slope of the inverse supply function for grower input using generalized method of moments (GMM) estimators. The model specifies the relationships between the observable consequences and unobservable grower characteristics imposing the first order conditions for principal’s profit maximization. The results show that the null hypothesis of no market power cannot be rejected.

CONSISTENCY BETWEEN MACRO- AND MICRO-DATA SETS IN THE JAPANESE HOUSEHOLD SECTOR

This paper makes a comparative analysis of the micro-data, the Family Income and Expenditure Survey (FIES) and the National Survey of Family Income and Expenditure (NSFIE) data, with the macro-data, the System of National Accounts (SNA), figures for the Japanese household sector. The overall FIES/SNA ratio is about 80 percent. In comparing the results to those of other countries, the figure seems to be not bad. However, the treatment of categories such as Gross Rent, Fuel and Power, and Medical Care and Health Expenses, require further consideration. In this regard we consider imputed rent for owner-occupied dwellings for the SNA and a sampling scheme for the FIES.     

Efficient estimation and inference in linear pseudo-panel data models

We consider pseudo-panel data models constructed from repeated cross sections in which the number of individuals per group is large relative to the number of groups and time periods. First, we show that, when time-invariant group fixed effects are neglected, the OLS estimator does not converge in probability to a constant but rather to a random variable. Second, we show that, while the fixed-effects (FE) estimator is consistent, the usual t statistic is not asymptotically normally distributed, and we propose a new robust t statistic whose asymptotic distribution is standard normal. Third, we propose efficient GMM estimators using the orthogonality conditions implied by grouping and we provide t tests that are valid even in the presence of time-invariant group effects. Our Monte Carlo results show that the proposed GMM estimator is more precise than the FE estimator and that our new t test has good size and is powerful.     

Effects of a short-stay vacation on the mental health of Japanese employees*

Many studies have focused on the effects of tourism on mental health. This study revealed that short-stay vacations at mental health rejuvenation facilities could reduce Japanese employees’ stress levels. We conducted two studies with two groups of participants (N?=?34 and 26, respectively), in order to obtain both objective and subjective evaluations. The results suggested that taking a short-stay vacation at a mental health rejuvenation facility was effective for helping employees to maintain good mental health, and that stress reduction was particularly evident in the highly stressed group. Practical and theoretical implications are discussed with a view to providing suggestions for addressing work-related stress in Japanese employees.