Foreign banks in Japan: A study of a Japanese deregulation process

The deregulation of foreign banks in Japan, although corresponding in broad outline to world-wide trends, has diverged substantially in many particulars from patterns seen elsewhere. It has tended to be excruciatingly slow and piecemeal and to have been of minimal benefit to foreign banks. A review of this process leads to the conclusion that these characteristics result from organisational and political-bureaucratic factors inherent to the Japanese style of government which is, in turn, partially a reflection of Japanese culture. Although these non-economic factors have influenced the specific pattern of change, its overall direction appears to have been consistent with the broader national interest.The authors wish to acknowledge financial support from the Social Science and Humanities Research Council of Canada, the Florsheimer Center for Policy Studies, and the Krueger Center for Financial Research.     

Multidimensional generalized Gini indices

Summary. The axioms that characterize the generalized Gini social evaluation orderings for one-dimensional distributions are extended to the multidimensional attributes case. A social evaluation ordering is shown to have a two-stage aggregation representation if these axioms and a separability assumption are satisfied. In the first stage, the distributions of each attribute are aggregated using generalized Gini social evaluation functions. The functional form of the second-stage aggregator depends on the number of attributes and on which version of a comonotonic additivity axiom is used. The implications of these results for the corresponding multidimensional indices of relative and absolute inequality are also considered.Received: 20 August 2003, Revised: 26 May 2004, JEL Classification Numbers: D63. Correspondence to: John A. WeymarkWe are grateful to our referee for his or her comments.     

Cost-effectiveness of combination daclatasvir-sofosbuvir for treatment of genotype 3 chronic hepatitis C infection in the United States

Background: A phase III trial evaluated the efficacy and safety of Daklinza (daclatasvir or DCV) in combination with sofosbuvir (SOF) for treatment of genotype (GT) 3 hepatitis C virus (HCV) patients.

Aim: This study evaluated the cost-effectiveness of DCV?+?SOF vs SOF in combination with ribavirin (RBV) over a 20-year time horizon from the perspective of a United States (US) payer.

Methods: A published Markov model was adapted to reflect US demographic characteristics, treatment patterns, costs of drug acquisition, monitoring, disease and adverse event management, and mortality risks. Clinical inputs came from the ALLY-3 and VALENCE trials. The primary outcome was the incremental cost-utility ratio. Life-years, incidence of complications, number of patients achieving sustained virological response (SVR), and the total cost per SVR were secondary outcomes. Costs (2014 USD) and quality-adjusted life years (QALYs) were discounted at 3% per year. Deterministic, probabilistic, and scenario sensitivity analyses were conducted.

Results: DCV?+?SOF was associated with lower costs and better effectiveness than SOF?+?RBV in the base case and in almost all scenarios (i.e. treatment-experienced, non-cirrhotic, time horizons of 5, 10, and 80 years). DCV?+?SOF was less costly, but also slightly less effective than SOF?+?RBV in the cirrhotic and treatment-naïve population scenarios. Results were sensitive to variations in the probability of achieving SVR for both treatment arms. DCV?+?SOF costs less than $50,000 per QALY gained in 79% of all probabilistic iterations compared with SOF?+?RBV.

Conclusion: DCV?+?SOF is a dominant option compared with SOF?+?RBV in the US for the overall GT 3 HCV patient population.     

Economic geography and wages in Brazil: Evidence from micro-data

This paper estimates the impact of market and supplier access on wage disparities across Brazilian states, incorporating the control for individual characteristics into the new economic geography methodology. We estimate market and supplier access disaggregated by industry, and we compute access to local, national and international markets separately. We find a strong correlation between market access and wage differentials, even after controlling for individual characteristics, market access level (international, national or local), and using instrumental variables.     

Attitude toward imprecise information

This paper presents an axiomatic model of decision making under uncertainty which incorporates objective but imprecise information. Information is assumed to take the form of a probability–possibility set, that is, a set P of probability measures on the state space. The decision maker is told that the true probability law lies in P and is assumed to rank pairs of the form (P,f) where f is an act mapping states into outcomes. The key representation result delivers maxmin expected utility (MEU) where the min operator ranges over a set of probability priors—just as in the MEU representation result of Gilboa and Schmeidler [Maxmin expected utility with a non-unique prior, J. Math. Econ. 18 (1989) 141–153]. However, unlike the MEU representation, the representation here also delivers a mapping, , which links the probability–possibility set, describing the available information, to the set of revealed priors. The mapping is shown to represent the decision maker's attitude to imprecise information: under our axioms, the set of representation priors is constituted as a selection from the probability–possibility set. This allows both expected utility when the selected set is a singleton and extreme pessimism when the selected set is the same as the probability–possibility set, i.e., is the identity mapping. We define a notion of comparative imprecision aversion and show it is characterized by inclusion of the sets of revealed probability distributions, irrespective of the utility functions that capture risk attitude. We also identify an explicit attitude toward imprecision that underlies usual hedging axioms. Finally, we characterize, under extra axioms, a more specific functional form, in which the set of selected probability distributions is obtained by (i) solving for the “mean value” of the probability–possibility set, and (ii) shrinking the probability–possibility set toward the mean value to a degree determined by preferences.     

Representation and aggregation of preferences under uncertainty

We axiomatize in the Anscombe-Aumann setting a wide class of preferences called rank-dependent additive preferences that includes most known models of decision under uncertainty as well as state dependent versions of these models. We prove that aggregation is possible and necessarily linear if and only if (society's) preferences are uncertainty neutral. The latter means that society cannot have a non-neutral attitude toward uncertainty on a subclass of acts. A corollary to our theorem is that it is not possible to aggregate multiple prior agents, even when they all have the same set of priors. A number of ways to restore the possibility of aggregation are then discussed.     

Measuring Inequalities without Linearity in Envy: Choquet Integrals for Symmetric Capacities

The (generalized) Gini indices rely on the social welfare function of a decision maker who behaves in accordance with Yaari's model, with a function f that transforms frequencies. This SWF can also be represented as the weighted sum of the welfare of all the possible coalitions in the society, where the welfare of a coalition is defined as the income of the worst-off member of that coalition. We provide a set of axioms (Ak) and prove that the three following statements are equivalent: (i) the decision maker respects (Ak), (ii) f is a polynomial of degree k, (iii) the weight of all coalitions with more than k members is equal to zero. Journal of Economic Literature Classification Number: D63.     

Brexit and Trade: Between Facts and Irrelevance

This paper examines four claims made by Brexit supporters regarding the United Kingdom’s post-exit arrangement on trade with the EU. It reviews the nature and importance of UK-EU trade links and the possible impact on the UK of leaving the EU customs union. It argues that all four of the claims are based on incongruous arguments which are either logically inconsistent or ignore the extent of the commitment required by trade agreements that tackle regulatory barriers, not just tariffs and border restrictions. We demonstrate that the attractiveness of the UK market will progressively decline as the UK enters into additional bilateral agreements. We conclude by analysing the implications for the UK of “taking back control” of its trade policy.