On the reduction of frequency curves

1. When a frequency distribution is given, it is often important to know whether the corresponding frequency curve is Gauss' normal curve, and if not, whether it can be reduced to one by an adequate change of variable, i.e. by changing bhe method of measuring the attribute. In this note I will give a simple method by which an arbitrary frequency curve may be reduced.     

Agricultural productivity differences and credit market imperfections

This paper presents a simple model to examine the implication of credit market imperfections when considering the huge variation of agricultural labor productivity across countries. The development of credit markets enables more agents to acquire skills to work in non-agricultural sectors. The expansion of the sectors decreases the labor supply to agriculture as well as increases the supply of modern intermediate inputs to agriculture. Agricultural producers accordingly substitute the relatively cheap intermediate inputs for labor to produce a given level of an agricultural good, and, thereby, the output per worker in agriculture is improved. Poor countries with less developed credit markets are, therefore, far less productive in agriculture than rich countries with well-developed credit markets.     

Estimating Non‐Keynesian Effects for Japan

Is a fiscal stimulus effective? This classical question has received significant research attention since the collapse of the global financial services firm Lehman Brothers. Although most studies agree on the existence of Keynesian multiplier effects, several studies also demonstrate the existence of non‐Keynesian effects. What explains this lack of consensus in the literature? In this paper, we aim to bridge the two views by estimating a near‐vector autoregressive system that includes interaction terms of fiscal instruments, and the debt‐to‐gross domestic product (GDP) or the primary‐deficit‐to‐GDP ratios. Moreover, to embed the dynamics of the debt‐to‐GDP ratio in the analysis, we explicitly incorporate the government budget constraint. By computing and comparing the impulse response functions, we find Keynesian effects when fiscal conditions are sound, and non‐Keynesian effects when the primary deficit is large.     

ENDOGENOUS CYCLES IN A SIMPLE MODEL WITH LAGGED EXTERNALITIES ON PRODUCTIVITY

This paper presents a simple model of endogenous cycles. In the model, working experience creates learning‐by‐doing externalities that improve labor productivity but it takes long time before the externalities come into effect. In addition, individuals have preferences with a subsistence consumption level. In the presence of the subsistence consumption requirement, a productivity increase generates the income effect that surpasses the substitution effect, and individuals choose to increase leisure time at the expense of supplying labor. The interactions between productivity changes through the lagged externalities and labor supply generate cycles endogenously. The model analysis shows that the dynamics exhibit cyclical fluctuations around a unique steady state.     

Implications from Biased Probability Judgments for International Disparities in Momentum Returns

Momentum is a consistent phenomenon in financial data from the majority of markets around the globe. One prominent exception is the Japanese market, where returns from a momentum-investment strategy are nonexistent. The authors investigated international differences in the representativeness heuristic, which is one potential driver of momentum. After observing sequences of a random walk, subjects give probability estimates for the direction of the respective next change. The experiment was conducted in Japan and in Germany. For a subgroup of participants with lower cognitive abilities our results are perfectly in line with international momentum evidence.     

Multistage public education,voting, and income distribution

This paper proposes a theory to study the formulation of education policies and human capital accumulation. The government collects income taxes and allocates tax revenue to primary and higher education. The tax rate and the allocation rule are both endogenously determined through majority voting. The tax rate is kept at a low level, and public funding for higher education is not supported unless the majority of individuals have human capital above some threshold. Although public support for higher education promotes aggregate human capital accumulation, it may create long-run income inequality because the poor are excluded from higher education.     

Distributional preference in Japan

Using experiments developed by Engelmann and Strobel ( 2004 ), this study investigates distributional preference in Japan. We find that just over half the people in the study have a maximin preference, approximately 7 to 19% have an efficiency preference, approximately 8% have a self‐interest preference, and approximately 18% chose the allocation that would reduce the payoff to the rich and the poor, given that her/his payoff would remain constant. The last preference could be interpreted as what is referred to as “malice”, “deep envy” or a “feeling of vulnerability” in behavioural economics and cross‐cultural psychology.     

Preestablished harmony: The Japanese government's demand for Japanese government bonds

The Japanese government is heavily indebted but the yield on the Japanese government bond (JBG) remains low to date. We hypothesize that the presence of the Japanese government as a large stable investor of JGBs exerted a stabilizing influence on private JGB traders and thus rendered the risk premium for sovereign default negligible. To identify the influence of a large stable JGB holder, we utilize a surprise change in the policy stance toward public debt holding as a quasi-experiment. We estimated a VARMA model using daily data and found that an announced government withdrawal led to a 50-basis-point increase in the yields of 10-year JGBs. Our study suggests that large public debt holding reduces the risk premium and is one factor behind the low yield.