December 2001
Noritsugu Nakanishi (Kobe University)
"On the existence and efficiency of the von Neumann-Morgenstern
stable set
in a n-player prisoners' dilemma"
International Journal of Game Theory
<nakanishi@econ.kobe-u.ac.jp>
We show that there exist von Neumann-Morgenstern (vN-M) stable sets
in a
n-player version of the prisoners' dilemma game with preplay negotiations
in
which every player can deviate unilaterally from the currently proposed
combination of actions but can not do so jointly with other players,
and
that every vN-M stable set includes at least one Pareto-efficient
outcome.
The negotiation among the players is formulated as the "individual
contingent threats situation'' within the framework of the theory
of social
situations due to Greenberg (1990). The method of proving the existence
also
provides us with a step-by-step method of constructing the vN-M
stable set.
Ichiroh Daitoh (Tohoku University)
"Environmental Protection and Urban Unemployment:
Environmental Policy Reform in a Polluted Dualistic Economy"
Review of Development Economics
<idaito@intcul.tohoku.ac.jp>
This paper explores sufficient conditions for the welfare-improving
environmental policy reform in the Harris-Todaro economy. A rise
in the
pollution tax rate in the urban manufacturing has spillover effects
on the
two labor market distortions: the less-than-optimal manufacturing
employment
and the urban unemployment. The necessary and sufficient conditions
for them
to be weakened are identified. If both are weakened the welfare
improves.
Otherwise, we need to develop an alternative sufficient condition.
It is
shown that there exists a range of welfare-improving pollution tax
rates,
and that it corresponds to the lower values of tax rate. This range
may
shrink by the wage subsidy policy and the technological change toward
less
pollution-intensive techniques.
September 2001
Koichi Yotsuya (Doshisha University)
"Low Growth Equilibrium Accompanied by High Levels of Educational
Attainment"
Japanese Economic Review
<et1105@mail3.doshisha.ac.jp>
We demonstrate the low-growth trap associated with high educational
attainment in an overlapping generations model by examining the
dual
positive effect of senior educated workers in leading-edge technology:
on technological progress and on young workers’ on-the-job learning.
If new technology is sufficiently productive, young workers demand
education to update technology when old, and then high technological
growth is sustained in the future. Conversely, if new technology
is
unproductive, they demand education merely to improve the skills
necessary for existing technology, and then technological progress
stagnates. Nevertheless, vigorous investment in education occurs
since
young workers have little hope for on-the-job learning.
Kazuo Nishimura (Kyoto University) and Koji Shimomura (Kobe University)
"Trade and indeterminacy in a dynamic general equilibrium
model"
Journal of Economic Theory
<simomura@rieb.kobe-u.ac.jp>
This paper introduces sector-specific externalities in the Heckscher-Ohlin
two-country dynamic general equilibrium model to show that indeterminacy
of
the equilibrim path in the world market can occur. Under certain
conditions
in terms of factor intensities, there are multiple equilibrium paths
from
the same initial distribution of capital in the world market, and
the
distribution of capital in the limit differs among equilibrium paths.
One
equilibrim path converges to a long-run equilibrium in which the
international ranking of factor endowment ratios differs from the
initial
ranking; another equilibrium path maintains the initial ranking
and
converges to another long-run equilibrium. Since the path realized
is
indeterminate, so is the long-run trade pattern. Therefore, the
Long-Run
Hecscher-Ohlin Preditiction is vulnerable to the introduction of
externality.
Murray C. Kemp (UNSW) and Koji Shimomura (Kobe University)
"A theory of voluntary unrequited international transfer"
Japanese Economic Review
<simomura@rieb.kobe-u.ac.jp>
This paper proposes a theory of voluntary unrequited international
transfers which explicitly allows for an international externality
such
that the wellbeing of each country is influenced by the wellbeing
of other
countries. Formulating a simple two-country and two-commodity model,
this
paper shows that (a) either neither country extends aid to the other
or one
country extends aid and both countries benefit from the aid, and
(b) there
exists acceptable (Arrow-Debreu) economies such that neither country
extends aid to the other and there exist acceptable economies such
that one
country extends aid to the other.
Makoto Yano (Keio University) and Fumio Dei (Kobe University)
"Trade, Vertical Production Chain, and Competition Policy"
Review of International Economics
<dei@rose.rokkodai.kobe-u.ac.jp>
In this study, we build a trade model that renders tractable the
process in which
imperfect competition in a country's downstream sector affects the
rest of the world
through international trade. For this purpose, we view internationally-traded
goods
as middle products in the vertical chain of production, in which
middle products are
produced upstream and transformed into final consumption goods downstream.
Using that model, we demonstrate that suppression of competition
in a country's
downstream sector may serve as a beggar-thy-neighbor policy, increasing
that country's
own utility while reducing that of its trading partner countries.
Eiji Fujii (Otaru University of Commerce)
"Exchange Rate and Price Adjustments in the Aftermath of
the Asian Crisis"
International Journal of Finance and Economics
<efujii@res.otaru-uc.ac.jp>
This study investigates the behavioral dynamics of the real exchange
rates
of five East Asian economies - Indonesia, Korea, Philippines, Singapore
and
Thailand - in the aftermath of the recent currency crisis. The results
of
cointegration analyses suggest that, despite the turbulent exchange
rate
movements during the crisis, the long-run purchasing power parity
has
remained to dictate the exchange rate and price relationship for
all but
Indonesia. The effects on the short-run dynamics are not unanimous,
and
there are indications of structural changes for selected countries,
namely
Korea and Thailand. Further, using impulse responses, we find that
the speed
of real exchange rate mean reversion is barely affected by the crisis,
except for the Korean won. Overall, the empirical results suggest
that the
effects of the Asian crisis can generally be regarded as a temporary
deviation rather than a fundamental shift in the real exchange rate
behavior.
April 2001
Murray C. Kemp (UNSW) and Koji Shimomura(Kobe University)
"The Sonnenschein-Debreu-Mantel Proposition and the Theory
of International Trade"
Review of International Economics
<simomura@rieb.kobe-u.ac.jp>
Much of the comparative statics of trade theory rests on the unrealistic
assumption that in each trading country all households are alike
or behave
collectively as though they are alike. In the present paper we show
that
two well-known comparative statical propositions are highly sensitive
to
the relaxation of the assumption and suggest that many other results
are
equally fragile
Kazuo Nishimura(Kyoto University) and Koji Shimomura(Kobe University)
"Indeterminacy in a dynamic small open economy"
Journal of Economic Dynamics and Control
<simomura@rieb.kobe-u.ac.jp>
We show that, even under socially constant returns to scale, indeterminacy,
i.e., a continuum of dynamic general equilibrium paths converging
to a
common steady state, can arise in a dynamic small open economy with
production externalities and endogenous time preferences in which
production is incompletely specialized.
March 2001
Toru Kikuchi (Kobe University)
"A Note on the Distribution of Trade Gains in a Model of
Monopolistic Competition"
Open Economies Review
<kikuchi@econ.kobe-u.ac.jp>
This note examines the relationship between relative country size
and the welfare consequences of opening trade in a model of
monopolistic competition with trade costs. The findings indicate
that if two countries produce differentiated products in
trading equilibrium, the rate of welfare changes brought
about by opening trade will be equalized across the countries.
Yuri Sasaki ( Meijigakuin University)
"Pricing-to-Market Behavior: Japanese Exports to the US,
Asia and the EU"
Review of International Economics
<yurissk@eco.meijigakuin.ac.jp>
This paper examines the pricing-to-market (PTM) behavior of Japanese
exporters in the US, Asian and EU markets. Our empirical evidence
shows that
PTM elasticity is highest to the US market. This matches the intuitive
reasoning that the US market is more competitive than the EU and
Asian
markets for Japanese exporters. Furthermore, PTM elasticities estimated
in
this paper using expected exchange rates are positive but their
amounts are
smaller than PTM elasticities estimated by previous papers with
actual
exchange rates. The difference may be due to the fact that the invoice
currency for most Japanese exports is the US dollar.
February 2001
Yin-Wong Cheung (University of California, Santa Cruz) and Eiji Fujii
(Otaru
University of Commerce)
“A Note on the Power of Money-Output Causality Tests”
Oxford Bulletin of Economics and Statistics
<efujii @ res.otaru-uc.ac.jp>
This study suggests that some empirical findings against money-output
causality can be the consequence of ignoring autoregressive conditional
heteroskedastic (ARCH) errors. Monte Carlo results confirm that
ARCH effects
drastically reduce the power of the standard causality test. The
maximum
likelihood approach allowing for ARCH effects, on the other hand,
provides a
good power performance. Using different specifications and sample
periods,
Friedman and Kuttner (1993) and Thoma (1994) report limited evidence
of
money causing output. We detect significant ARCH effects in the
models
considered by these studies. Once ARCH effects are explicitly accounted
for,
we find that the monetary effect is significant though its magnitude
is
quite small.
January 2001
Yin-Wong Cheung, Menzie Chinn (University of California, Santa Cruz)
and
Eiji Fujii (Otaru University of Commerce)
"Market Structure and the Persistence of Sectoral Real Exchange
Rates"
International Journal of Finance and Economics
<efujii@res.otaru-uc.ac.jp>
We examine the relationship between market structure and the persistence
of
U.S. dollar-based sectoral real exchange rates for fourteen OECD
countries.
Our empirical results based on disaggregated data suggest that differences
in market structure significantly determine the rates at which deviations
from sectoral purchasing power parity decay. Specifically, industries
with a
larger price-cost margin are found to exhibit slower parity reversion
of
their sectoral real exchange rates. Further, as the degree of intra-industry
trade activity increases, sectoral real exchange rate persistence
becomes
more pronounced. These findings suggest that an imperfectly competitive
market structure contributes to the well-documented persistence
in real
exchange rates.