Contributions and Channels of Interindustry R&D Spillovers: An Estimation for Japanese High-tech Industries

This paper estimates the contributions of R&D spillovers to four high-tech industries in Japan—general machinery, electrical machinery, transportation machinery and chemicals—by estimating the trans-log cost and share functions that include the R&D stock variables of own and spillover-source industries. The candidates for spillover- source industries are selected on the basis of large R&D flow or R&D proximity. The R&D flow measures the spillover embodied in purchased intermediate goods using input–output coefficients. The R&D proximity measures the extent of similarity between a pair of industries of the distribution of R&D expenditures across research fields, and is expected to show the likelihood of spillover at the R&D stage. The results suggest that electrical machinery benefited from R&D in the chemical industry, through the purchase of intermediate goods, whereas general machinery and transportation machinery benefited from R&D in the metal products industry, through R&D proximity. There was no evidence of the chemical industry benefiting from R&D spillovers. These results clearly imply that the contributions and the channels of R&D spillovers are diverse, casting doubt on earlier studies that used weighted sums of R&D expenditures (or their stocks) of other industries as aggregate spillover variables.     

Inflation Targeting and the Pass‐through Rate in East Asian Economies

There has been serious debate regarding whether the inflation targeting (IT) framework for the emerging market economies has been an effective nominal anchor. Focusing on Korea, Thailand and the Philippines, this article aims to contribute to the debate by providing empirical evidence on a decline in the ‘pass‐through’ effect with IT adoption. Our main findings are as follows. First, under the IT framework, Korea has followed an inflation responsive rule in a forward‐looking manner, while Thailand has adopted the rule in a backward‐looking manner. Second, only Korea experiences a reduction in the pass‐through effect under IT adoption, thereby showing a linkage between the forward‐looking inflation responsive rule and the pass‐through effect. Finally, a test of the sensitivity of inflation expectations to external price shocks in Korea supports this linkage.     

International Economic Interdependence and Exchange‐rate Adjustment under Persistent Stagnation

Using a two‐country, two‐commodity dynamic optimization model with general homothetic preference for the commodities, this paper examines the effects of a tariff and a quota on consumption and employment in the case where persistent unemployment arises due to a liquidity trap. A trade restriction improves the current account, which causes the home currency to appreciate and harms the competitiveness of home firms. Therefore, home employment and consumption decrease while foreign employment and consumption increase. Tariff‐quota equivalence is found to be valid. Preference, technological and policy parameter changes that improve the current account in general worsen home unemployment.     

Foreign Direct Investment and the Unionization Rate

Technological innovations improve the welfare of a country facing fixed terms of trade, but may lead to immiserization when the terms of terms of trade are adversely affected. This paper establishes that transport innovation can be immiserizing for a small country when the transport sector exhibits variable returns to scale. The release of resources from the transport sector triggers Rybczynski-like effects, and the resulting expansion (contraction) in the volume of trade and in the demand for transport services raises unit costs of these services, and may reduce welfare in the presence of decreasing (increasing) returns to scale. [411]     

Lifetime employment in Japan: Concepts and measurements

This paper addresses three questions: (1) How big is lifetime employment in Japan? (2) How unique is it? and (3) How is it changing? Through the use of multiple data sets and methods, I find that no more than 20% of workers in Japan are likely to be employed under informal lifetime employment contracts, a far smaller percentage than has been reported. Job mobility remains considerably lower in Japan than in other advanced economies (particularly the US). Evidence regarding changes in lifetime employment is mixed. The share of workers in the core is declining, but the probability of job separations has remained stable for those who are already in the system. There is also evidence that the economic stagnation of the 1990s disproportionately affected females and younger workers.     

Experimental Study on Negotiation Process in Participatory Decision Making Process in a Community

In participatory decision making process in a community, plural participants, such as governmental agencies, local municipalities, citizen groups and private companies are involved in the process. For achieving resolution, the methodologies for sharing understanding on a problem and formation of cooperative relationship are important. In this paper, the game experiment for observing people??s behaviors in conflicts is designed. In the game experiment, subjects are asked to negotiate with their counterparts. The games have similarities with typical conflicts which can arise frequently in participatory decision making process. The role of communication in participatory decision making process is also discussed.     

Currency Regime and Monetary Autonomy. Empirical Evidence Using Recent and Global Data from 1990 to 2007

This paper analyzes the exchange rate regimes from the perspective of monetary independence. To be specific, using recent and global data, we examine the sensitivity of domestic interest rates to the international interest rate, by conducting co-integration tests and by estimating the adjustment speeds through error-correction model, for different de facto currency regimes and for different types of capital markets. Our estimation results basically support the traditional views of ‘impossible trinity’, as far as the cases with open capital markets are concerned. The floating regime shows the less sensitivity of domestic interest rates to the international interest rate than the fixed regime does, which implies some capacity for domestic monetary autonomy under the floating regime. The cases with closed capital markets, on the other hand, include the cases showing high sensitivity of interest rates in some emerging market economies, which might imply the ‘fear of floating’ hypothesis.     

GROWTH,STAGNATION AND STATUS PREFERENCE

We show that an economy grows or stagnates depending on which of three objects people most esteem as tokens of status. If the main object of status preference is consumption, then a steady state with full employment is reached. If it is physical capital (which is a producible asset), then permanent growth with full employment occurs. However, if it is money (which is not a producible asset), stagnation with persistent unemployment arises.     

A Model of Financial Markets with Endogenously Correlated Rational Beliefs

This paper studies how communication amongst agents influences the equilibria of a financial economy. We set up a standard overlapping generations model with assets, while allowing for heterogeneous beliefs. The paper explicitly describes how communication causes the beliefs of the agents to be correlated. In particular, it is shown that communication may generate large fluctuations even if the unconditional probability beliefs themselves are independent. Because of the complex nature of the problem, we use simulations to examine the characteristics of the equilibria Part of the results presented in this paper is based on my Ph.D. thesis at Stanford University. I gratefully acknowledge the inspiration obtained from innumerable discussions with Mordecai Kurz about this subject over the years. Also, I appreciate comments from Kenneth J. Arrow and Peter J. Hammond as well as from the participants of the workshop at Stanford University, University of Tokyo and the 1st Illinois workshop in Economic Theory (University of Illinois at Urbana-Champaign) and the anonymous referee