A heterogeneous agent model of asset price dynamics with two time delays

This study constructs a heterogeneous agents model of a financial market in a continuous-time framework. There are two types of agents, fundamentalists and chartists. The former follows the traditional efficiency market theory and has a linear demand function, whereas the latter experiences delays in the formation of price trends and possesses a S-shaped demand function. The main feature of this study is a theoretical investigation on the effects caused by two time delays in a price adjustment process. In particular, two main results are demonstrated: One is that the stability switching curves are analytically derived, and the other is that the stability losses and gains can repeatedly occur when the shape of the curves are meandering. Although it is well known that a time delay has a destabilizing effect, these results imply that multiple delays can stabilize and destabilize a market price generating persistent deviations from the stationary price.     

Considerations on Inequality,Corporate Governance,and Financialization

Abstract

Disjunctures between corporate governance, increasingly dominated by financial considerations, and social inequality have been among the motor forces of current world-wide “populist” voter revolts. This article looks for clues for the relation between economic inequality, corporate governance, and financialization by re-examining the work of Karl Marx and of Adolphe Berle and Gardiner Means. Marx is widely considered, in Japan, to have pointed out that the division of profit into the wages of management and the profit of enterprise is considered as a path to the association. However, this general interpretation in Japan may not be sufficient for capturing capitalism’s contemporary reality. This presentation develops an alternative interpretation of this chapter by combining Marx’s explanation with the theory of the separation of ownership and management proposed by Berle and Means. We then explore causal relations among income inequality, corporate governance, and financialization.     

Economic Loss Due to Reputation Damage: A New Model and Its Application to Fukushima Peaches

Consumers have responded negatively to agricultural products originating from the Fukushima prefecture after the 2011 Fukushima Daiichi nuclear power plant incident. These consumers’ behavioural changes have caused substantial economic losses for the producers located in contaminated regions through reductions in market prices, consumption quantities and market shares. Remarkably, these losses are observed also for uncontaminated products, posing an opportunity for research in reputation damage. However, existing literature is very rare on empirical modeling of such losses. We utilise the Dixit–Stiglitz demand framework to derive a simple but efficient empirical model that uses market data to quantify reputation damage. This model estimates changes in the perceived quality of a product originating in contaminated regions in relation to those products originating from other competing regions. The model also measures subsequent loss in market share for those products grown in contaminated regions. In our application to Fukushima, results suggest that consumers’ valuation of peaches from Fukushima decreased dramatically (between 22.5% and 23.6%) in the year the nuclear accident occurred, but rapidly recovered in the following years. The results also show that the degree of impact varies across wholesale markets. Fukushima farmers lost about 13.1–18.9% of sales due to reputation damage. Estimates from our proposed models deliver meaningful information in the context of policy interventions such as transfer programmes financed by gainers to compensate reputation losses.     

Married Women’s Lifestyles in Japan: Disparities Based on the Number of Children

In order to explore the complex mechanisms of married women’s decisions in matters of childbirth, we studied empirically the relations between family size and aspects of lifestyle through a questionnaire survey administered in 2006 to married women living in the city of Suita, Japan, a suburb of Osaka. Lifestyle was taken as a complex of mutual relationships among individual (biographical, psychological) and social (socioeconomic, social support) factors, and our aim was to clarify differences in Japan in lifestyle among married women based on the number of their children. Analysis of 495 respondents showed mothers with only a single child were more self-reliant: they tend to give birth at a late age, enjoy cooperation with their husbands in family finances, be psychologically at ease, and not seek help from others in child rearing. Mothers with three or more children embody more of the traditional role for Japanese women: they tend to give birth at an early age, be reliant on their husbands financially, be less at ease psychologically, and seek others’ help in child rearing. These differences suggest that more focus on psychological, not just economic support in government policy to counteract declining fertility is an important issue for future consideration.     

Dynamic complexity in a stochastic rationing model

We have constructed a simple discrete-time macroeconomic model founded on individuals' stochastic optimizing behavior. Actual transactions are carried out in a sequence of disequilibrium markets in which the level of aggregate trade is the lesser of aggregate demand and supply, and in which the individual faces all-or-nothing basis stochastic rationing. In such environments, the actual transaction an individual obtains is generally different from the expectation he forms. This difference is a source of macro-dynamics. The paper demonstrates that, through the interactions of individuals in different markets, the expectation adjustment process is inherently nonlinear and generates complex dynamics involving chaos.I am indebted to Professors Richard Day, James Dulgeroff, Hajime Hori, Osamu Kamoike, Masahiro Okuno-Fujiwara, Makoto Towada, Makoto Yano, and two referees of this Journal for helpful comments and many constructive suggestions to improve the quality of this paper substantially. I am grateful to financial support from Tohyo Trust Bank. All remaining errors are my responsibility.     

Green Tax Reform in an Oligopolistic Industry

OECD countries reduce or eliminate certain taxes when they introduce new environmental taxes. The purpose of this paper is to analyze the incidence of such green tax reform in an oligopolistic industry. The paper shows that a rise in taxes could result in the expansion of the aggregate pollution in the presence of a large technology gap. The paper further shows that the government loses tax revenue as a result of the green tax reform if it continues to apply the same environmental standard. This implies that the government needs to raise environmental standards to keep the existing level of public spending after a green tax reform.     

Local and Personal Networks in Employment and the Development of Labor Markets: Evidence from the Cut Flower Industry in Ethiopia

We examine the roles of local and personal networks in the employment process and the emergence and development of the labor market in Ethiopia’s growing cut flower industry. Using primary survey data of 320 workers randomly sampled from all 64 farms, we find that workers who were recruited informally using the social ties were paid less than the formally-recruited workers at hiring. However, these workers quickly increased their productivity, and the effect of social ties on wages disappeared over time. Further, we find that the development of labor market for this newly-emerged industry took place particularly within the industrial cluster.