SHORT-RUN TRADE SURPLUS CREATION IN A TWO-SECTOR SETTING

This study investigates the effect of the suppression of competition in the domestic non-tradable sector on a country's trade balance in a small open economy. Using a two-sector model, this study demonstrates that the effect on the trade balance of such a suppression depends on the sector on which the policy is imposed. This result sharply contrasts with Yano's result in a one-sector model demonstrating that such a policy unambiguously creates a trade surplus in the short run.     

WHAT CAUSED FIXED INVESTMENT TO STAGNATE DURING THE 1990S IN JAPAN? EVIDENCE FROM PANEL DATA OF LISTED COMPANIES*

Taking into account considerable changes in the corporate finance behaviour of listed Japanese companies during the 1990s, this paper empirically investigates the causes of the stagnation of the listed companies’ fixed investment during the 1990s, using panel data from the companies’ financial statements. Our findings include the following: (i) while positive cash flow sensitivity was detected for the companies listed during the 1990s, it was not necessarily a consequence of the binding of liquidity constraints; (ii) declines in Tobin's q explain decreases in fixed investment throughout the 1990s; and (iii) the holding of liquid assets acted as a buffer against liquidity shocks.     

Reverse Mortgage Loans: A Quantitative Analysis

Reverse mortgage loans (RMLs) allow older homeowners to borrow against housing wealth without moving. Despite rapid growth in this market, only 1.9% of eligible homeowners had RMLs in 2013. In this paper, we analyze reverse mortgages in a calibrated life‐cycle model of retirement. The average welfare gain from RMLs is $252 per homeowner, and $1,770 per RML borrower. Bequest motives, uncertainty about health and expenses, and loan costs account for low demand. According to the model, the Great Recession's impact differs across age, income, and wealth distributions, with a threefold increase in RML demand for lowest income and oldest households.     

THE FOUNDATION OF MARKET QUALITY ECONOMICS*

This study is based on my observation that high quality markets are indispensable for the healthy growth of a modern economy. Many problems surrounding markets are attributable to the lack of high quality markets. An industrial revolution creates extremely vibrant but unhealthy markets. This study introduces a concept of fairness in dealing and pricing (competitive fairness), which differs from efficiency, and defines market quality as a measure for the efficiency of allocation and the fairness of dealing and pricing. This study shows that competitive fairness is achieved by several market mechanisms that I constructed in my previous work.     

ENDOGENOUS FLUCTUATIONS IN TWO‐COUNTRY MODELS*

This paper investigates the interlinkage in the business cycles of large‐country economies in a free‐trade equilibrium. We consider a two‐country, two‐good, two‐factor general equilibrium model with Cobb‐Douglas technologies and linear preferences. We also assume decreasing returns to scale in the consumption good sector. We first identify the determinants of each country's global accumulation pattern in autarky equilibrium, and secondly we show how a country's business cycles may spread throughout the world once trade opens. We thus give capital intensity conditions for local and global stability of competitive equilibrium paths.