Inflation and Innovation in a Schumpeterian Economy with North–South Technology Transfer

This study analyzes how inflation affects innovation and international technology transfer via cash‐in‐advance constraints on R&D. We consider a North–South quality‐ladder model that features innovative Northern R&D and adaptive Southern R&D. We find that higher Southern inflation causes a permanent decrease in technology transfer, a permanent increase in the North–South wage gap, and a temporary decrease in the Northern innovation rate. Higher Northern inflation causes a temporary decrease in the Northern innovation rate, a permanent decrease in the North–South wage gap, and ambiguous effects on technology transfer. Finally, we calibrate the model to China–U.S. data to perform a quantitative analysis.     

CAPACITY EXPANSION IN MARKETS WITH INTER‐TEMPORAL CONSUMPTION EXTERNALITIES

This paper analyses market capacity expansion in the presence of inter‐temporal consumption externalities such as consumer learning, networks and bandwagon effects. An externality leads to an endogenous shift of market demand that responds to past market capacity. Whereas market capacity grows in waves, its magnitude depends on the degree of market concentration. The competitive environment contributes to S‐shaped time patterns of market capacity expansion. On the other hand, using a low introductory price, a monopolist plans an initially larger amount of market cultivation than a competitive market capacity expansion.     

NONPARAMETRIC LIKELIHOOD: EFFICIENCY AND ROBUSTNESS*

Nonparametric likelihood is a natural generalization of parametric likelihood and it offers effective methods for analysing economic models with nonparametric components. This is of great interest, since econometric theory rarely suggests a parametric form of the probability law of data. Being a nonparametric method, nonparametric likelihood is robust to misspecification. At the same time, it often achieves good properties that are analogous to those of parametric likelihood. This paper explores various applications of nonparametric likelihood, with some emphasis on the analysis of biased samples and data combination problems.     

How to Make the Japanese Public Pension System Reliable and Workable

This paper has two objectives. The first is to identify current problems in Japan's pension administration. The chief problem is a weak governance structure. In particular, the current governance structure ignores the role of pension participants. A rigorous division and clear assignment of responsibilities to each of the pension participants, the Social Insurance Agency, and the Ministry of Health, Labor and Welfare is urgently needed. Given rapid demographic change, the second objective is to consider the case for full tax financing of the National Basic Pension. It is estimated that the net burden would vary across different cohorts, but we demonstrate that the net burden can be smoothed across different cohorts. This result is quite different from that in the 2008 Interim Report of the Japanese National Council on Social Security.