ENDOGENIZING CONSUMPTION IN THE INPUT‐OUTPUT MODEL: THEORY AND APPLICATION

Since the basic model of input‐output analysis does not take into consideration the income effect on consumption expenditure, we constructed a model which endogenizes consumption and breaks down integrated production inducement into Leontief and Keynesian effects in a generalized context and in two solution approaches. Using short‐term marginal consumption propensities, we estimated that Keynesian effects make up about 14% of the integrated inducement effects for Japan. The public services sector, which is not influential in the basic model, becomes very influential in consideration of Keynesian effects. Manufacturing and service sector products are the main targets of the expanded consumption. The impact of a change in exogenous final demand can be easily simulated by applying the suggested apparent input coefficient matrix to the integrated inverse matrix.     

Japanese government debt and sustainability of fiscal policy

We construct quarterly series of the revenues, expenditures, and debt outstanding for Japan from 1980 to 2010, and analyze the sustainability of the fiscal policy. We pursue three approaches to examine the sustainability. First, we calculate the minimum tax rate that stabilizes the debt to GDP ratio given the future government expenditures. Using 2010 as the base year, we find that the government revenue to GDP ratio must rise permanently to 40–47% (from the current 33%) to stabilize the debt to GDP ratio. Second, we estimate the response of the primary surplus when the debt to GDP ratio increases. We allow the relationship to fluctuate between two “regimes” using a Markov switching model. In both regimes, the primary surplus to GDP ratio fails to respond positively to debt, which suggests the process is explosive. Finally, we estimate a fiscal policy function and a monetary policy function with Markov switching. We find that the fiscal policy is “active” (the tax revenues do not rise when the debt increases) and the monetary policy is “passive” (the interest rate does not react to the inflation rate sufficiently) in both regimes. These results suggest that the current fiscal situation for the Japanese government is not sustainable.     

ANALYSIS OF HOUSEHOLD LEISURE AND SHOPPING BEHAVIOR IN IBARAKI PREFECTURE, JAPAN

Understanding household leisure and shopping behavior is an important component of market research, shop location decisions, travel behavior, and consumer behavior studies. This paper estimates a gravity model of travel behaviors related to leisure and shopping trips in the Ibaraki Prefecture, Japan, based on a 1998 survey data set by Poisson regression. The overall results indicate that GDP per capita of cities of origin and of destination, population, train stations, and store area of the destination city affect trip flow positively. Intercity distance, store areas in the city of origin, and higher density in the city of origin negatively affect trip flow. Different variables distinctly affect the shopping behavior for different commodities.     

NATIONAL AND REGIONAL WAGE CURVES IN JAPAN 1981–2001

There is evidence in many countries of an inverse relationship between the real wages paid to workers and the unemployment rate in their local labor market, a so-called wage curve. However, the evidence to date for Japan has been rather limited. In this paper, we estimate wage curves for Japan using pooled cross-section time-series data from 1981 until 2001. The presence of a wage curve is confirmed. The wage curve has become slightly more elastic after the bubble economy of the 1980s than it was in the pre-bubble and mid-bubble period. The unemployment elasticity of pay is greater for males than for females. We also estimate regional wage curves using time-series data. The male wage curve elasticity is larger in the northern regions of Hokkaido and Tohoku and the western region of Shikoku, while it is smaller in the central regions of Hokuriku, Tokai and Kinki.     

A Theoretical Analysis of Liner Shipping Conferences and Strategic Alliances

We analyze the economic impacts of industrial organizational struggles on the international liner shipping market. Operating ratios of different markets are discussed by incorporating rate, service level, and other variables into a standard microeconomic model. If two different carriers agree on a shipping conference price and/or share a strategic alliance service level, and maximize consolidated profit, a member carrier finds it easier to make its operation profitable than the individual profit optimization case; other carriers are worse off in becoming profitable. If the carriers face inelastic demand, the price continues rising until demand becomes elastic enough for the equilibrium to be relevant. The conference is expected to play a coordination role so that the market does not become unsustainable in the adjustment process to reach equilibrium.     

The Turnover of Market Leaders in Growing and Declining Industries: Evidence from Japan

This article explores the turnover of market leaders in the manufacturing and information and communications industries in Japan. We propose indices for market mobility by focusing on the turnover of market leaders and examine how the likelihood of the turnover of market leaders differs across industries. We provide evidence that market leaders are more likely to be replaced by competitors in growing and declining industries, relative to industries where the growth is more stable. Moreover, the results reveal that the turnover of market leaders is more likely to occur in research and development-intensive industries. Furthermore, the interaction effects of industry growth and concentration indicate that the turnover of market leaders is more likely to occur in declining industries with high concentration.     

Industrial development in Malaysia and Singapore: Empirical analysis with multiple‐cone Heckscher–Ohlin Model

This paper employs the multiple‐cone Heckscher–Ohlin model to analyze industrial development in Malaysia and Singapore. In particular, we focus on industrial upgrading along with capital accumulation as a key determinant for the cross‐country difference in production technology and income. By pooling two countries’ data on factor endowment and sectoral output in manufacturing from 1990 to 2008, we estimate the common industrial development paths of the two‐cone Heckscher–Ohlin model, the Rybczynski linear relationship between capital–labor ratio and sectoral output per capita. Our results demonstrate that, after controlling for quality of workers (by educational attainment), the two countries resided in different cones during our sample period, implying that Singapore succeeded in accumulating capital steadily with the support of foreign investment and upgrading its industry mix to make it more capital‐intensive. The separation of cones is also consistent with the observed gap in gross domestic product per capita between the two countries. Furthermore, we implement a factor‐augmenting productivity test to see the gaps in efficiency of capital and human‐capital‐augmented labor and confirm no significant difference between the two countries.