Government Size and Trust

This paper uses individual level data from the Japanese General Social Survey to examine how government size influences generalized trust. After controlling for the endogeneity of government size using instrumental variables, I found: (1) using all samples, government size is not associated with generalized trust, and (2) after splitting the sample into workers and non-workers, government size does not influence generalized trust for non-workers, whereas it significantly reduces generalized trust for workers. This suggests that workers, through their work experience, might have to face greater bureaucratic red tape coming from “larger government,” leading to negative externality effects on relationships of trust in the labor market.     

Effect of Linguistic Heterogeneity on Technology Transfer: An Economic Study of FIFA Football Rankings

This paper used Fédération Internationale de Football Association (FIFA) world ranking points data to examine how linguistic heterogeneity has an impact on technology transfer from the most developed countries. The major findings were that the learning effect from the most developed countries on team performance is larger for developing countries than for developed ones and that linguistic heterogeneity has a detrimental effect on technology transfer for developed, but not developing countries. The results presented here are interpreted to imply that the importance of common and proper comprehension of team strategy among members, which improves team performance but is hampered by linguistic heterogeneity, depends on the stage of development.     

How Do Neighbors Influence Investment in Social Capital? Homeownership and Length of Residence

This paper uses individual data from Japan to explore how the circumstances of where a person resides is related to the degree of their investment in social capital. Controlling for unobserved area-specific fixed effects and various individual characteristics, I found (1) not only that homeownership and length of residence are positively related to investment in social capital, but also that rates of homeownership and long-time residency in a locality increase an individual’s investments in social capital. Also, (2) the effects of local neighborhood homeownership and local length of residence are distinctly larger than those of an individual’s homeownership or length of residence.     

The effect of learning varies according to locality: Micro data analysis of the lawyer market in Japan

Using individual level data, this paper examines how and to what extent the behavior and perception of those bringing lawsuits differ between large district courts (competitive lawyer market) and medium or small district ones (less competitive lawyer markets). The major findings are: (1) in medium and small, but not large districts, trial experience discourages people from employing a lawyer. (2) A natural person is less likely to employ a lawyer than a legal entity in medium and small districts, but not in large ones. (3) The self-rated cost of searching for a lawyer is lower in large districts than small ones. It follows from these results that the lower competitive pressure in the lawyer markets in medium and small districts results in higher costs to employ a lawyer than is found in large districts.     

A simple panel stationarity test in the presence of serial correlation and a common factor

This paper develops a simple test à la Pesaran (2007) for the null hypothesis of stationarity in heterogeneous panel data with cross-sectional dependence in the form of a common factor in the disturbance. We also allow for serial correlation.     

Time path in innovation, imitation, and growth: the case of the motorcycle industry in postwar Japan

This study attempts to explore how an industry evolves over time based on a case study of the motorcycle industry in Japan from 1948 to 1964. Using individual firm data, we estimate the determinants of technology improvement and firm growth separately for different development phases, after controlling for the probability of firm survival. We find that the industrys rapid growth in the early phase can be explained by massive entry and the imitation of simple technologies, whereas sustained growth in later phases can be explained by innovations and subsequent imitations, as well as the exit of inefficient firms.JEL Classification: O14, L10, L62, N65 Correspondence to: Tetsushi SonobeWe are grateful to Kotaro Horiuchi, Shunji Tanaka, Katsuaki Nishino, Michael Kevane, Uwe Cantner, and two anonymous referees for their helpful comments and suggestions.     

Detection of Structural Change in the Long‐run Persistence in a Univariate Time Series*

In this paper, we investigate a test for structural change in the long‐run persistence in a univariate time series. Our model has a unit root with no structural change under the null hypothesis, while under the alternative it changes from a unit‐root process to a stationary one or vice versa. We propose a Lagrange multiplier‐type test, a test with the quasi‐differencing method, and ‘demeaned versions’ of these tests. We find that the demeaned versions of these tests have better finite‐sample properties, although they are not necessarily superior in asymptotics to the other tests.     

Model selection criteria in multivariate models with multiple structural changes

This paper considers the issue of selecting the number of regressors and the number of structural breaks in multivariate regression models in the possible presence of multiple structural changes. We develop a modified Akaike information criterion (AIC), a modified Mallows’ C_p criterion and a modified Bayesian information criterion (BIC). The penalty terms in these criteria are shown to be different from the usual terms. We prove that the modified BIC consistently selects the regressors and the number of breaks whereas the modified AIC and the modified C_p criterion tend to overfit with positive probability. The finite sample performance of these criteria is investigated through Monte Carlo simulations and it turns out that our modification is successful in comparison to the classical model selection criteria and the sequential testing procedure robust to heteroskedasticity and autocorrelation.     

AMU Deviation Indicators for Coordinated Exchange Rate Policies in East Asia and their Relationships with Effective Exchange Rates

After the Asian currency crisis in 1997, the monetary authorities of East Asian countries have been strengthening their regional monetary cooperation. In this paper, we propose a deviation measurement for coordinated exchange rate policies in East Asia to enhance the monetary authorities’ surveillance process for their regional monetary cooperation. We calculate an Asian Monetary Unit (AMU) as a weighted average of East Asian currencies following the method used to calculate the European Currency Unit (ECU). Also, we calculate AMU Deviation Indicators which show how much each of the East Asian currencies deviates from a hypothetical benchmark rate in terms of the AMU. Furthermore, we investigate relationships between the AMU Deviation Indicators and the effective exchange rates, which mean international price competitiveness in terms of international trade. We found strong relationships between the AMU Deviation Indicators and the effective exchange rates except for some currencies. The results suggest that monitoring the AMU Deviation Indicator will be useful for the monetary authorities’ surveillance in East Asia in order to stabilise their effective exchange rate or price competitiveness among the East Asian countries.