The Macroeconomic Implications of the New Basel Accord

This paper assesses the macroeconomic implications of BaselII in light of recent development in the literature. It arguesthat although Basel II is likely to strengthen banks' incentivesto control their risk-taking, it may reduce credit supply tocertain borrowers, such as small- and medium-sized enterprises(SMEs) and firms based in developing countries. Furthermore,Basel II may increase procyclical fluctuation of bank loanswhile weakening the monetary transmission mechanism during recessions.A widespread adoption of the "through-the-cycle" risk modelsmay mitigate these problems, but not completely eliminate them.This paper also considers whether monetary policy can be usedto counter effectively the procyclicality problem inherent inBasel II. (JEL E52, G21, G28)     

Welfare‐at‐Risk and Extreme Dependency of Regional Wheat Yields: Implications of a Stochastic CGE Model

Stochastic computable general equilibrium (CGE) models have ignored regional correlations in agricultural yields, assuming random shocks to be independent between regions. This could lead to misinterpretation of simulation outputs which ignore extreme positive or negative harvests at the global scale. We develop a multi‐regional CGE model which allows for five types of interregional correlation between wheat yields to analyse the vulnerability of countries against fluctuating international markets, focusing on Value at Risk (VaR) and extreme dependency. We find that global welfare risks could be underestimated by up to 33% if significant interregional correlations in yield shocks are not taken into account. Egypt, Kazakhstan, Ukraine, the former Soviet Union and Northern Africa are particularly vulnerable to global volatilities in terms of economic welfare.     

A Statistical Analysis Between Consumer Behavior and a Social Network Service: A Case Study of Used-Car Demand Following the Great East Japan Earthquake and Tsunami of 2011

When a large-scale disaster hits a community, especially a water-related disaster, there is a scarcity of automobiles and a sudden increase in the demand for used cars in the damaged areas. This paper conducts a case study of a recent massive natural disaster, the Great East Japan Earthquake and Tsunami of 2011 to understand those car scarcities and demand in the aftermath of the catastrophe. We analyze the reasons for the increase in demand for used cars and how social media can predict people’s demand for used automobiles. In other words, this paper explores whether social media data can be used as a sensor of socio-economic recovery status in damaged areas during large-scale water-related disaster-recovery phases. For this purpose, we use social media communication as a proxy for estimating indicators of people’s activities in the real world. This study conducts both qualitative analysis and quantitative analysis. For the qualitative research, we carry out semi-structured interviews with used-car dealers in the tsunami-stricken area and unveil why people in the area demanded used cars. For the quantitative analysis, we collected Facebook page communication data and used-car market data before and after the Great East Japan Earthquake and Tsunami of 2011. By combining and analyzing these two types of data, we find that social media communication correlates with people’s activities in the real world. Furthermore, this study suggests that different types of communication on social media have different types of correlations with people’s activities. More precisely, we find that social media communication related to people’s activities for rebuilding and for emotional support is positively correlated with the demand for used cars after the Great East Japan Earthquake and Tsunami. On the other hand, communication about anxiety and information seeking correlates negatively with the demand for used cars.     

An analysis of stability of the north–south growth model of trade: Saddle-path stability of the generalized grossman–helpman model with skilled and unskilled labours

Abstract

Following the Common Agency approach to political equilibrium, we examine how domestic interest groups can influence national policies toward FDI and how the choice of instrument by the government can affect lobbying activities. Domestic firms lobby for lower subsidies when a discriminatory subsidy on FDI is applied. However, when a subsidy is applied uniformly to both groups, they may lobby for higher subsidies. The nature of lobbying is also different for proportional and lump-sum profit subsidies when uniformly applied. The qualitative effect of the number of domestic firms or the degree of corruption on the equilibrium depends on the choice of instruments. Finally, with the help of numerical simulation, we examine whether there is any potential conflict between the government and the lobby groups on the choice of the instrument.     

Special Quotes Invoke Autocorrelation in Japanese Stock Prices*

It is reported in the present paper that 1‐min returns on TOPIX have exhibited significant autocorrelation at 5‐min intervals since 1997/1998. Special quotes that are issued whenever there is a price jump in excess of a predetermined band seem to be the source of this autocorrelation, because these have been automatically updated at 5‐min intervals since August 1998 and have appeared during the first 30 min from opening. Individual stock returns also exhibit fifth‐order autocorrelation, but this disappears when the data with special quotes are excluded from the sample. Therefore, the autocorrelation is caused by the special quotes: a type of market microstructure noise.     

SIMULTANEOUS MEASUREMENT OF TIME AND RISK PREFERENCES: STATED PREFERENCE DISCRETE CHOICE MODELING ANALYSIS DEPENDING ON SMOKING BEHAVIOR*

Measuring time and risk preferences and relating them to economic behaviors are important topics in behavioral economics. We developed a new method to simultaneously measure the rate of time preference and the coefficient of risk aversion. Analyzing the individual‐level relationships between preference parameters and cigarette smoking, we conclude that current smokers are more impatient and risk‐prone than nonsmokers. Heavy smokers are the most impatient and risk‐prone, whereas ex‐smokers are the most patient and risk‐averse. Among nonsmokers, neither age‐related nor gender‐related differences were found. On the other hand, risk and time preferences are significantly different according to age and gender for smokers.     

From hierarchy to hybrid: The evolving nature of inter-firm governance in China's automobile groups

Despite the rapid growth of automobile industry in China, much remains to be known about the governance structure especially the inter-firm relationship within the Chinese automobile groups. Against China's changing institutional environment and compared to the established knowledge on automobile group governance in Japan, this study provides a case analysis of the evolving nature of inter-firm relationship in one of China's major automobile groups, Tianjin Automotive Group (TAG). A top-down hierarchical administration characterizes the inter-firm relationship in TAG before 1999 due to the heavy influence of the old institutional arrangement. Over time, especially entering 2000, weakening institutional ties between the state and TAG forced the group to be more responsive to market changes and to systematically learn Japanese-style supplier management from a joint venture with Toyota Group. The paper provides rare insights into the evolution of governance structure among the emerging Chinese automobile groups and extends the institution-based view of strategy into the studies of inter-firm relationship in automobile industry.     

Testing the incentive effects in tournaments with a superstar

This paper studies the effects of the levels and the structure of prizes on the efforts of agents with heterogeneous ability in a tournament model. In particular, we examine how the presence of a highly able agent affects the effort levels of other agents as well as the effects of the total and the marginal prizes. Using panel data from the Japan Golf Tour, we estimate the effects of the presence of a superstar, and the size of the total and marginal prizes on the scores of professional golfers. We find that the presence of a superstar adversely affects the scores of the other players; that the larger the size of the total prize, the better are the scores; and that the larger the marginal prizes that players face at the end of the third round, the better the scores they achieve in the final round.     

Negotiated tariffs in free entry oligopoly under integrated markets

Using the Nash bargaining approach, this paper analyzes the negotiation of tariffs between two countries in free-entry oligopolies under integrated markets. Employing a symmetric model with linear demand and cost functions, the paper shows that for both countries Pareto-efficient negotiated tariffs are larger than the tariffs at the Nash equilibrium of a non-cooperative tariff game (tariff war) in which each country imposes its optimum tariff.     

Dynamic analysis of innovation and international transfer of technology through licensing

This paper develops a quality-ladder type dynamic general equilibrium model with endogenous innovation and technology licensing as a major source of international technology transfer in developing countries. Examining the dynamic characteristics of the model fully, we explore the short- and long-run effects of both an improvement in the probability of reaching a licensing agreement with a given effort and an increase in the license fee rate. The model shows that the former promotes innovation and technology transfers in both the long and short run, while the latter discourages them.