Designing the optimal public pension system

This paper uses a two‐period overlapping generations model in order to provide a theoretical design for the optimal public pension system based on a partial equilibrium analysis. Household preferences depend on two periods' consumption and leisure and are positively homogeneous of degree m with respect to consumption in the working and retired periods. We present characteristic features of the optimal public pension system in this paper. First, differences in the population growth rate do not affect the large/small relation between the optimal net lifetime burden rates of generations. Second, we present the optimal public pension system explicitly if m < 1 and m ≠ 0. Third, the difference between the market time‐preference rate and the social time‐preference rate provides a crucial insight into the optimal burden rate of each generation.     

What Does Trade Openness Measure?

An empirical measure of trade openness is defined as the ratio of total trade to GDP, and represents a convenient variable routinely used for cross‐country studies on a variety of issues. However, the effects that the crude measure captures remain ambiguous, making it difficult to interpret the empirical results. Drawing on several strands of the literature, this study examines the informational content of the trade openness measure using intranational and international data. We find that, even for fully integrated economies within a country, trade openness is approximately half as variable as it is for segmented diverse countries around the world. The information it conveys is better characterized as the extent of the economic remoteness and idiosyncratic distribution of sectoral production. The cross‐country variation of trade openness derives more from the variability in GDP than trade.     

How Does Childbirth Alter Intrahousehold Resource Allocation? Evidence from Japan*

Exploiting unique panel data that include direct measurements of resource allocation within households, we investigated the impact of childbirth on intrahousehold allocation for married Japanese couples. Based on a collective model of the household, we developed reduced‐form and structural‐form estimation equations that allow us to focus on private goods to track the changes in intrahousehold resource allocation. We found one additional child is associated with a reduction in the wife's private expenditure share by at least two percentage points. This may be because she substitutes more say in decisions on the children for her own private expenditure share.     

Self‐rated Health Status of Japanese and Europeans in Later Life: Evidence from JSTAR and SHARE

Using panel data from two surveys in Japan and Europe, we examine the comparability of the self‐rated health of the middle‐aged and elderly across Japan and European countries and across the survey periods. We find that a person's own health is evaluated using different standards (thresholds) across the different countries and survey waves. When evaluated using common thresholds, the Japanese elderly are found to be healthier than their counterparts in the European countries. Reporting biases causing discrepancies between the changes in individuals' self‐rated health and their actual health over the survey waves are associated with education and country of residence.     

Perturbative Expansion Technique for Non-linear FBSDEs with Interacting Particle Method

In this paper, we propose an efficient Monte Carlo implementation of a non-linear FBSDE as a system of interacting particles inspired by the idea of the branching diffusion method of McKean. It will be particularly useful to investigate large and complex systems, and hence it is a good complement of our previous work presenting an analytical perturbation procedure for generic non-linear FBSDEs. There appear multiple species of particles, where the first one follows the diffusion of the original underlying state, and the others the Malliavin derivatives with a grading structure. The number of branching points are capped by the order of perturbation, which is expected to make the scheme less numerically intensive. The proposed method can be applied to semi-linear problems, such as American options, credit and funding value adjustments, and even fully non-linear issues, such as the optimal portfolio problems in incomplete and/or constrained markets.     

Globalizing activities and the rate of survival:: Panel data analysis on Japanese firms

This paper conducts a Cox-type survival analysis of Japanese corporate firms using census-coverage data collected by METI. A study of exiting firms confirmed several characteristics of Japanese firms in the 1990s. First, excessive internalization in the corporate structure and activities is harmful to corporate survival. Having too many establishments and affiliates weakens corporate performance. Efficient concentration on core competences increases the probability of survival. Second, global commitment helps Japanese firms be more competitive and more likely to survive. However, the channels of a firm's global commitment must be carefully selected. Small firms can benefit from exporting activities, though having foreign affiliates or conducting foreign outsourcing might aggravate their performance. Large firms, on the other hand, can conduct foreign direct investment and foreign outsourcing to possibly enhance the probability of their survival. Third, while corporate performance affects the choice of exits for affiliate firms, it does not affect the survival/exit of independent firms; suggesting the possible malfunctioning of the market mechanisms in the exits of independent firms. Fourth, we do not find any statistically significant evidence that firms with foreign shareholders are more likely to exit; there is little evidence of foot-loose behavior among foreign companies. J. Japanese Int. Economies 17 (4) (2003) 538–560.     

Corporate Environmental and Economic Performance of Japanese Manufacturing Firms: Empirical Study for Sustainable Development

This study examines the relationship between environmental performance and economic performance in Japanese manufacturing firms. The environmental performance indicators include CO₂ emissions and the aggregate toxic risk associated with chemical emissions relative to sales. Return on assets (ROA) is used as an indicator of economic performance. We demonstrate that there is a significant inverted U‐shaped relationship between ROA and environmental performance calculated by aggregated toxic risk. We also find that the environmental performance increases ROA through both returns on sales and improved capital turnover. However, we observe a significant positive relationship between financial performance and environmental performance based on CO₂ emissions. These findings may provide evidence for the consequences of firms' environmental behavior and sustainable development. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.     

Spatial analysis of competition among local governments and the price of land: the case of Zhejiang Province

Abstract

This empirical study focuses on competition between local governments as they strive to attract companies through the auction of land use rights. In the literature on competition between local governments, the focus has tended to be toward growth rates based on performance evaluation or tax rate-based competition for attracting companies. In China, the property tax system is still underdeveloped and local governments cannot independently set tax rates. Therefore, this study focuses on a type of ‘dumping’ activity by which local governments auction land use rights to attract industrial companies and empirically test this hypothesis using the spatial lag model.