Postwar business cycles in Japan: A quest for the right explanation

This paper explores the nature of postwar business cycles in Japan. Our basic strategy is to study different production behaviors of various manufacturing industries over business cycles. We are particularly interested in the problems of whether only monetary shocks are important and, if not, what kind of real shocks are important. We conclude that purely monetary theory is inadequate, and that construction activities were major causes of aggregate fluctuations in the pre-first oil shock period of rapid growth. We also present some evidence suggesting that real business cycle theory is implausible.     

Measuring emerging categories of innovation: Modularity and business model

The oft-cited dichotomy between incremental and radical innovations is less important when we have to analyze how a new technology and its social institution coevolve. In this context, besides incremental and radical innovations, C. Freeman added two more categories of technical change: one is change in the technology system and the other is change in the technoeconomic paradigm.However, as the information technology (IT) revolution progresses further, we come to need more categories of innovations. In the computer industry, the concept of “module” is becoming a solution to growing complexity. In the new IT environment, we can be proactive in demand creation. It becomes crucial, therefore, whether the creation of new “business models” has followed technical innovations. In this article, we will try to demonstrate how these different categories of innovations, i.e., modularization and new business model creation, can be measured.     

Quantitative analysis of modularization in the automobile and PC industries

Much research has been done on modularizing the PC industry and automobile industry. In the analysis of the effect of modularization in the PC and automobile industries, however, very little of this research has been quantitative. In this paper, we use the number of patent applications for PC and automobile components to analyze the modularization in the PC and automobile industry. We calculated a ratio of the number of patents applied for by PC/automobile manufacturers vis-à-vis the total number of patent applications for the components, and used it to quantitatively judge whether PC/automobile manufacturers still hold the initiative with respect to R&D. The analysis indicates that PC manufacturers no longer hold the R&D initiative but that automobile manufacturers still do for engine control systems. On the other hand, it indicates that automobile manufacturers no longer hold the R&D initiative on the safety and communication control systems. The paper finally verifies the correlation between modularization and R&D initiative by means of regression analysis.     

Peripheral Tasks Are Offshored

I build a model in which an offshoring firm has a core task and a peripheral task. This study demonstrates that in a world composed of the North and the South, the peripheral task is offshored but the core task is not. The study also demonstrates that offshoring does not occur if the skill level of the southern workers is too low.     

Koizumi carried the day: Did the Japanese election results make people happy and unhappy?

This paper investigates whether the Japanese people were happy and unhappy with the general election conducted on September 11, 2005, in which the Prime Minister, Koizumi, won a landslide victory. We conducted a large survey just after the election to ask people how happy they were and which party they had supported. Although there are consistent tendencies that supporters of ruling parties were happier and supporters of opposition parties were unhappier, the effect was not significant. Considering the results of previous studies that showed that Americans demonstrated significant responses to the result of a presidential election, this study suggests that the Japanese people are indifferent to politics.     

Corporate finance side of the Q theory of investment

This paper presents a model of a firm under uncertainty in which the financial and investment decisions are simultaneously determined. If profits are small relative to investment, the firm finances a constant fraction of incremental investment by debt and the rest by retentions. If profits are large relative to investment, a constant fraction of marginal finance comes from debt and the rest from new shares. In these two financing regimes a one-to-one relationship between optimal investment and Q can be derived. No such relation exists in the third and intermediate regime in which incremental investment is entirely debt-financed.     

Ex-day behavior of japanese stock prices: New insights from new methodology

We study the ex-dividend day behavior of Japanese stock prices on the ex-day in March, when most stocks simultaneously go ex-divided, for the period 1983–1987. We find a positive abnormal return for stocks that go ex-dividend. However, prices drop by nearly the full amount of the dividend. However, prices drop by nearly the full amount of the dividend once the common abnormal return is subtracted from individual returns. For the many ex-dividend day stocks that also go ex-rights on the same March ex-day, we find that the return is on average higher than that for stocks without rights issues.     

The productivity of public capital: Evidence from Japan’s 1994 electoral reform

This paper estimates the causal effect of public capital stock on Production, using Japanese prefectural data. We first articulate the difficulty of consistently estimating the regional-level production function with public capital that results from the endogeneity of the public capital stock amount. The public capital amount could be endogenous because of the central government’s political decision-making process of public capital allocation or the local government’s budgetary constraints.Japan’s electoral reform in 1994 offers an exogenous variation in the public capital investment across regions, and we exploit this event to estimate the causal effect of public capital on production. The reform drastically changed the distribution of political representation in the Lower House across regions, and it accordingly changed the allocation of public capital across regions as well. We cannot reject the null hypothesis that public capital is not productive based on the estimates from this natural experimental identification strategy.