Trade,savings and a nontraded good

In this note we derive a sufficient condition and necessary condition for the adoption of free trade to decrease savings in terms of any good in a model with two traded goods and one non-traded good. We assume more generally than Pattanaik, and following Pasinetti, that a fraction of total capital is owned by labor.     

Fertility,Intra‐Generational Redistribution,and Social Security Sustainability

Incorporating heterogeneity in preference to having children into an overlapping generations model of a small open economy, we examine the effects of changes in the size of pay‐as‐you‐go (PAYG) social security on fertility choices of individuals and population growth of the economy. It is shown that PAYG social security will raise population growth by increasing the number of individuals who have children and the number of children parents have if the system involves redistribution between retirees with different contributions, whereas, if it has no redistribution, PAYG social security does not affect the fertility decisions of individuals.     

The cournot oligopoly and competitive equilibria as solutions to non-linear complementarity problems

The Cournot oligopoly and competitive equilibria are identified with solutions to non-linear complementarity problems, which leads to integration of the existence and stability proofs of these equilibria.     

Firm age and the evolution of borrowing costs: Evidence from Japanese small firms

This paper investigates how firms’ borrowing costs evolve as they age. Using a new panel data set of about 100,000 bank-dependent small firms for 1997–2002 and focusing on the channel of “adaptation” (i.e., surviving firms’ borrowing costs decline as they age) and that of “selection” (i.e., total borrowing costs decline as defaulting firms exit), we find that the reputation hypothesis suggested by Diamond (1989) provides a more plausible explanation of the downward sloping age profile of borrowing costs than the firm dynamics (Cooley and Quadrini, 2001) or the relationship banking (Boot and Thakor, 1994) hypothesis. In addition, we examine whether the firm selection process in Japan has been natural or unnatural. Our findings suggest that it has been natural in that firms with lower quality are separated, face higher borrowing costs, and are eventually forced to exit, which contrasts with the results of previous studies on credit allocations in Japan, including Peek and Rosengren (2005). Further, we find that the evolution of borrowing costs is partially due to selection but is mainly attributable to adaptation.     

A two-country dynamic Heckscher–Ohlin model with physical and human capital accumulation

We study a two-country endogenous growth model in which the long-run growth is propelled by the accumulation of physical and human capital. We show that in the integrated world economy, there exists a unique and locally saddlepoint stable balanced growth equilibrium. We also show that the incorporation of adjustment costs in the process of human capital accumulation leads to a lower long-run growth rate. We then show that, in the 2-country world economy with international trade, balanced growth is possible. Finally, we present a dynamic Heckscher–Ohlin theorem concerning the pattern of international trade. We appreciate the constructive comments from an anonymous referee which have improved this paper significantly. We acknowledge also with gratitude the valuable comments of Hideyuki Adachi, Kosuke Aoki, Daniel Bernhofen, Eric Bond, Koichi Futagami, Ronald Jones, Tamotsu Nakamura and Raymond Riezman on earlier versions. We appreciate also the beneficial comments from the participants of the GEP conference on New Directions in International Trade Theory held in the University of Nottingham and of the Adachi OB Workshop in Kobe University.     

Time preference and two-country trade

We present a dynamic two-country model of international trade with endogenous time preference. We show that if the two countries have similar preferences, production technologies and labor endowments, there exists a unique and stable steady state such that both consumption and investment goods are produced in both countries. Unlike the case of constant time preferences, the steady state is independent of the initial international distribution of capital. We prove a dynamic Heckscher–Ohlin theorem such that the labor-abundant country exports the labor-intensive good.     

Can IT be Japan's savior?

This paper constructs a multi-sector model to take explicit account of the very sharp change in the relative price between non-IT and IT goods. The model is calibrated to the Japanese economy, and its solution path from 1990 on is compared to Japan's macroeconomic performance in the 1990s. Compared to the one-sector analysis of Japan in the 1990s [Hayashi, F., Prescott, E.C., 2002. The 1990s in Japan: A lost decade. Rev. Econ. Dynam. 5, 206–235], our model does slightly better or just as well in accounting for Japan's output slump and does worse in accounting for the capital–output ratio. We also show that, to revive a 2% long-term growth in per capita GDP, Japan needs to direct 10% of private total hours to the IT sector. J. Japanese Int. Economies 19 (4) (2005) 543–567.     

Production externalities and local dynamics in discrete-time multi-sector growth models with general production technologies

The present paper examines the dynamic properties of discrete-time, multi-sector growth models in the presence of sector-specific externalities. It extends the literature by allowing for multiple capital good sectors with general social constant returns production technologies. We establish conditions for the steady-state equilibrium to be locally determinate or locally indeterminate, depending crucially on the ratios of the social to private marginal products and the number of capital good sectors. We show that when the ratios of the social to private marginal products are uniform across all sectors, the steady state is always locally determinate in a two-sector model, although local indeterminacy might still arise when the economy features more than two sectors.     

Voluntary Export Restraints and Economic Welfare: A General Equilibrium Analysis

We derive some sufficient conditions for the Suzumura-Ishikawa proposition on voluntary export restraints to hold when their model is extended to a general equilibrium framework. The sufficient conditions are concerned with the magnitude of income effects which play no role in the partial-equilibrium analysis of Suzumura and Ishikawa.