December
2005
Toru
Kikuchi (Kobe University) and Koji Shimomura (KObe University)
"Monopolistic
competition with cross-country technological differences
and international trade"
Japan
and the World Economy
<simomura@rieb.kobe-u.ac.jp>
We develop a two-factor, three-sector model of international trade in
which there are cross-country technological differences in the monopolistically
competitive sector. Firms in one country have a technology with high
fixed costs and low marginal costs; firms in the other country have a
technology with low fixed but high marginal costs. Under this model,
although not under the monopolistically competitive model with identical
technologies, trade patterns are determined by the interaction between
the distribution of factor endowments (i.e., the Heckscher-Ohlin aspect)
and technological differences in the monopolistically competitive sector
(i.e., the Chamberlinian-Ricardian aspect). Furthermore, we show that
autarky commodity prices are not very useful for predicting trade
patterns, which is counterintuitive and again contrary to findings under
the monopolistically competitive model with identical technologies.
November
2005
Ryuhei
Wakasugi (Keio University)
"The
Effects of Chinese Regional Conditions on the Location Choice of
Japanese Affiliates"
Japanese Economic Review
<wakasugi@econ.keio.ac.jp>
This
paper examines how heterogeneous factors such as the abundance of
better educated human resources,
wage costs, increasing numbers of special economic zones, industrial
agglomeration and the enrichment of
social infrastructure affect the location choice of Japanese affiliates
by correlating Japanese data to data
from Chinese provinces and Special Cities. The results reveal that
factors related to human resources are
more important than the 'hard' factors in attracting foreign firms to
invest China.
Naoto
Jinji (Okayama University)
"International
Trade and Terrestrial Open-access Renewable Resources in
a Small Open Economy"
Canadian
Journal of Economics
<jinji@e.okayama-u.ac.jp>
In
this paper, I investigate the effects of trade liberalization and
policies on deforestation by extending
a small open economy model with
open-access renewable resources developed by Brander and Taylor
(1997a).
I endogenize the carrying capacity of the resource. I find
that unlike Brander and Taylor, trade liberalization
may increase the
forest stock in the resource abundant country and may decrease the
forest stock in the resource
scarce country. Moreover, the policies
primarily aimed at protecting forests, such as import restrictions by
importing countries and forest certification for well-managed forests,
may have perverse effects on the forest stock.
Kazuo Nishimura (Kyoto University)
and Koji Shimomura (Kobe University)
"Indeterminacy in a dynamic two-country
model"
Economic
Theory
<simomura@rieb.kobe-u.ac.jp>
The
purpose of this paper is to show that indeterminacy can arise in a
simple
competitive two-country dynamic model
of international trade, free of
externalities, imperfect competition, and government intervention. This
seemingly
surprising result is based on an assumption that there is no
international credit market. As well be shown later,
the assumption implies
that dynamic equilibrium paths of our two-country, therefore
heterogeneous
consumer,
model are not generally Pareto-optimal.
Ngo Van Long (McGill University)
and Koji Shimomura (Kobe University)
“Voluntary Contributions to a Public Good:
Non-neutrality Results”
Pacific
Economic Review
<simomura@rieb.kobe-u.ac.jp>
We show that the well-known neutrality
theorem (that a small redistribution of wealth does not affect the
aggregate
private provision of a public good) no longer holds if agents take into
account
the effect of their individual supply of
the public good on the relative price
of private goods.
Kazuo Nishimura (Kyoto University), Koji Shimomura (Kobe University) and Ping
Wang (Washington University)
“Duality with Sector-Specific Externalities
Under Social Constant Returns”
Japanese
Economic Review
<simomura@rieb.kobe-u.ac.jp>
We develop dual approaches to quantity and
price relationship of the production in a general multisectoral model
with
sector-specific externalities. The production of each good exhibits
socially
constant returns to scale but privately
decreasing returns. We find that the
Stolper-Samuelson theorem holds for factor intensity ranking from the
social
perspective and that the Rybczynski theorem holds for factor intensity
ranking
from the private perspective. The
price-output dual fails to hold in general.
Moreover, we re-establish the Heckscher-Ohlin theorem in the two-sector
case,
as well as the factor endowment-factor price and price-output
comparative
statics in the high-dimension case
under proper conditions.
Kazuo Nishimura (Kyoto University), Koji Shimomura (Kobe University) and Ping
Wang (Washington University)
“Production Externalities and Local
Dynamics in Discrete-Time Multi-Sector Growth Models with General
Production
Technologies”
International
Journal of Economic Theory
<simomura@rieb.kobe-u.ac.jp>
The present paper examines the dynamic
properties of discrete-time, multi-sector growth models in the presence
of
sector-specific externalities. It extends the literature by allowing
for multiple
capital good sectors with general socially
constant-returns production
technologies. We establish conditions for the steady-state equilibrium
to be
locally determinate
or locally indeterminate, depending crucially on the
rations of the social to private marginal products and the number of
capital
good sectors. We show that when the rations of the social to private
marginal
products are uniform across all sectors,
the steady state is always locally
determinate in a two-sector model, although local indeterminacy might
still
arise when
the economy features more than two sectors.
Yunfang Hu (Kobe University), Murray C. Kemp (Macquarie University)
and Koji Shimomura (Kobe University)
“Endogenous Growth: Fragile Foundations?”
Review
of Development Economics
<simomura@rieb.kobe-u.ac.jp>
The Frankel, Romer and Lucas theories if
endogenous growth rest on the assumptions of knowledge-based
externalities
and
price-taking representative agents. It is argued that, in an context of
long-run growth, these assumptions are mutually
incompatible, that
representative agents will cooperate to internalize the externalities
and will
cease to be price takers,
and that therefore the relevance of theories base on
those assumptions must be questioned.
Yunfang Hu (Kobe University), Murray C. Kemp (Macquarie University)
and Koji Shimomura (Kobe University)
“A Factor Endowment Theory of Endogenous
Growth and International Trade”
Review
of Development Economics
<simomura@rieb.kobe-u.ac.jp>
This paper presents a dynamic general
equilibrium model of multi-country, two-good and two-factor, in which
both
long-run
growth and international trade patterns are examined. In each country,
government expenditure on a public intermediate good
plays a crucial rile in
the realization of persistent growth. It is shown that the long-run
pattern of
international trade is determined
in a Heckscher-Ohlin manner.
Murray
C. Kemp (Macquarie University) and Koji Shimomura (Kobe University)
“Trade Between Countries with Radically
Different Preferences”
Economics
Bulletin
<simomura@rieb.kobe-u.ac.jp>
We examine the role of radical
international differences in preferences in determining patterns of
international trade,
given that the trading countries share a common technology
and identical factor endowment ratios. It is characteristic
of our model that
the equilibrium autarkic commodity price ratios are unique and negative
and
that there is a unique
positive equilibrium free- trade price ratio, implying
that the positive equilibrium free-trade price ratio is not bounded
by the
equilibrium autarkic price ratios. This finding contrasts sharply with
the
familiar Torrens-Ricardo and Heckscher-
Ohlin propositions.
Toru Kikuchi (Kobe University), Koji
Shimomura (Kobe University) and Dao-Zhi Zeng (Kagawa University)
“On the Emergence of Intra-Industry Trade”
Journal
of Economics
<simomura@rieb.kobe-u.ac.jp>
This study explores the determinants of
intra-industry trade by extending a Chamberlinian-Ricardian
monopolistic
competition trade model to have a larger number of industries as did
Dornbush,
Fischer and Samuelson (1977). It will be
shown that the degree of cross-country
technical differences among industries
plays and important role as a determinant
of trade within each industry.
Noritsugu
Nakanishi (Kobe University)
"Free
Entry, Market Size, and the Optimistic Stability"
International Game Theory Review
<nakanishi@econ.kobe-u.ac.jp>
We
examine the long-run outcomes under free entry-exit when each firm not
only takes account of the effects of her own entry-exit on the market
structure but also takes full account of the effects due to other
firms' simultaneous entry-exit. Adopting the framework of the theory of
social situations (TOSS), we derive a unique set of stable outcomes,
which is based only on two fundamental assumptions of the
``firms-as-profit-maximizers'' and the ``free entry-exit,'' but not on
any specific mode of play (i.e., a specification of how the players
make their decisions, take actions within the market, and think
of the other players' behavior). We compare the stable outcome with the
long-run equilibria under the competitive mode, the Cournot-Nash mode,
and the monopolistically competitive mode. We find that (i) each of
these equilibria can be compatible with the stable outcome only if the
market size is small and (ii) none of them can be compatible with the
stable outcome if the market size is sufficiently large; Further,
(iii), for almost all market size, the monopolistically competitive
equilibrium is compatible with the stable outcome if the
elasticity of substitution is sufficiently close to (but, greater than)
unity. In a sense, when the market size is sufficiently large, these
three modes of play are not consistent with two fundamental
assumptions.
October
2005
Tsuyoshi Toshimitsu (Kwansei Gakuin University) and Naoto Jinji (Okayama University)
"QUALITY DIFFERENTIATION, WELFARE, AND THE MODE OF COMPETITION
IN A VERTICALLY DIFFERENTIATED PRODUCT MARKET: A NOTE"
Japanese Economic Review
<ttstuomu@kwansei.ac.jp>
We analyze the implications of quality differences in a vertically differentiated product market
for social welfare by employing an endogenous quality choice model. We find that in the cases of
Bertrand and Cournot duopolies, the degree of quality differentiation at equilibrium in an unregulated
market is larger or smaller, respectively, than that of the socially second-best optimum. This implies
that a reduction in quality difference respectively increases or decreases social welfare in the case of
Bertrand or Cournot duopolies.
September
2005
Nobuhito Suga (Nagoya University) and Makoto Tawada (Nagoya University)
"International
Trade with a Public Intermediate Good and the Gains from Trade"
Review
of International Economics
<mtawada@soec.nagoya-u.ac.jp>
This
paper presents a one-primary factor, two-consumer good and two-country
model of
international trade where each country’s government supplies a
country-specific public
intermediate good so as to attain efficient production. By introducing
the Marshallian
adjustment process, it is demonstrated that the country with larger
factor endowment
exports the good whose productivity is more sensitive to the public
intermediate good.
Our analysis concerning the normative aspects of free trade shows the
following results.
First, at least one country gains from trade. Second, if a country
incompletely specializes
in the trading equilibrium, the country necessarily loses from trade.
Jota
Ishikawa, Hiroshi Mukunoki and Yoshihiro Mizoguchi
"Economic Integration and Rules of Origin under International
Oligopoly"
International Economic Review
<jota@econ.hit-u.ac.jp>
Free trade agreements (FTAs) have rules of origin (ROOs) to prevent
tariff
circumvention by firms of non-member countries. This paper points out
that
in imperfectly competitive markets, ROOs have another role overlooked
in the
existing literature. Instead of focusing on the impacts of ROOs in the
intermediate-good markets, we draw our attention to the final-good
markets
to examine the effects of ROOs. We find that under some conditions, ROOs
benefit both firms at the expense of consumers. Under some other
conditions,
ROOs benefit the firm producing outside the FTA and hurt the firm
producing
inside the FTA.
Keisaku
Higashida (Fukushima University) and Naoto Jinji (Okayama University)
"Strategic
Use of Recycled Content Standards under International Duopoly''
Journal
of Environmental Economics and Management
<
e038@ipc.fukushima-u.ac.jp>
We
examine the strategic use of recycled content standards (RCSs) under
international duopoly.
RCSs require firms supplying the domestic market to use a certain
proportion of recycled materials
as inputs. We demonstrate that, when there is no trade in recycled
materials, two identical countries
both set strategically stricter or laxer RCSs. However, when there is
trade in recycled materials,
it may be the case that one country sets a stricter RCS while the other
sets a laxer RCS. When
a world supply constraint on recycled materials is not binding, the
main source of the asymmetric
distortion in RCSs is a demand effect for recycled materials.
July
2005
Takumi
Naito (Tokyo Institute of Technology)
"Growth,
revenue, and welfare effects of tariff and tax reform: win-win-win
strategies"
Journal of Public Economics
<tnaito@soc.titech.ac.jp>
We
examine growth, revenue, and welfare effects of tariff and tax reform
with
a
two-good, two-factor endogenous growth model. Learning-by-doing and
intersectoral
knowledge spillovers contribute to endogenous growth consistent
with
incomplete specialization. We obtain two main results. First, trade
liberalization
raises (or lowers) the growth rate if and only if the import
sector
is more effective-labor-intensive (or capital-intensive). Second, we
can
attain growth, revenue, and welfare gains by combining
consumer-price-neutral
tariff and tax reform for growth enhancement with an
additional
rise in the consumption tax on the less distorted good.
Kenji
Fujiwara (Kobe University)
"Unilateral
and Multilateral Gains from Trade in International Oligopoly"
Economic
Record
<cfw00450@nyc.odn.ne.jp>
Constructing a two-agent model of international duopoly with increasing
returns, this paper examines the potential gains from free trade. It is
shown that under certain conditions, both agents in a country become
worse off in free trade than in autarky with no redistribution.
Further, the lump-sum compensation can never achieve a
Pareto-improvement in such an economy. However, we can find a
non-lump-sum redistributive scheme that makes nobody in the country
worse off in free trade than in autarky.
Alan D. Woodland
(University
of
Sydney)
and
Chisato
Yoshida (Ritsumeikan
University)
“RISK
PREFERENCE, IMMIGRATION POLICY AND
ILLEGAL IMMIGRATION”
Journal of
Development Economics
<cyoshida@ec.ritsumei.ac.jp>
The
paper analyzes the effects of government
policy upon illegal immigration. The model used as a vehicle for this
analysis
is an extension of Ethier’s one-small-country model of illegal
immigration to a
two-country context. We distinguish between the cases of capital
immobility and
free capital mobility, and consider illegal immigration when there are
border
patrols by the government and when there are internal enforcement
procedures in
effect. Unlike previous researchers who have assumed risk neutrality,
we
examine the impacts of government policy when prospective illegal
immigrants
exhibit risk averse and risk loving behavior. The relaxation of the
risk
neutrality assumption leads to the possibility of multiple and unstable
equilibria. Moreover, attitudes to risk and the probability of
detection are
shown to have implications for some equilibrium responses to tighter
surveillance.
June
2005
Nobuhito
Suga (Nagoya University)
"Reconsideration
of Trade Patterns in a Chamberlinian-Ricardian Model"
Economics
Bulletin
<suga@aurora.ocn.ne.jp>
This paper reexamines the patterns of trade in a
Chamberlinian-Ricardian model by introducing a simple dynamic process
of labor reallocation. Our analysis shows the following result. First,
the patterns of inter-industry trade are determined by technical
differences among countries. Second, whether intra-industry trade
emerges depends not only on the cross-country technical heterogeneity
but also on the size of a country and the expenditure share for
differentiated products. Our main finding is that intra-industry trade
can emerge in the trading equilibrium even if there is technical
heterogeneity among countries.
Yasuhiro Takarada (Nanzan University)
"Transboundary Pollution and the Welfare Effects of Technology Transfer"
Journal of Economics
<ytakara@ps.nanzan-u.ac.jp>
We examine the welfare effects of a transfer of pollution abatement technology
in a two-country model. In each country, one industry discharges
pollution as a byproduct of output, and the sum of domestic and
cross-border pollution decreases the productivity of the other industry.
We show the effects of technology transfer on the terms of trade,
pollution levels, and welfare. Technology transfer decreases the
pollution affecting each country under certain conditions. We derive and
interpret the conditions under which technology transfer enriches the
donor and the recipient. The results essentially depend on the trade
pattern and the fraction of cross-border pollution.
Toru Kikuchi (Kobe University)
"Network Externalities as a Source of Comparative Advantage"
Economics Bulletin
<kikuchi@econ.kobe-u.ac.jp>
This note examines how the network externalities of communications
activities and trading opportunities interact to determine the structure of
comparative advantage between countries. These interactions are
obtained by constructing a two-country, two-sector model of trade
involving a communications network sector. The role of network
interconnectivity, which allows users of a network to communicate with
users of another network, is also explored. A comparative advantage
in the good that requires network services is held by the countries
with interconnected networks.
May
2005
Fumiko
Takeda (University of Tokyo) and Katsumi Matsuura (Hiroshima University)
"Trade
and the Environment in Latin America: Examining the Linkage
with the USA"
Economics Bulletin
<takeda@geosys.t.u-tokyo.ac.jp>
This paper investigates how trade of ‘dirty’
goods with the USA can affect the
environmental pollution in Latin American (LA). By
controlling for trade openness,
the share of manufacturing in GDP, and the trade of pollution-intensive
products
with USA, CO2 emissions are estimated for 14 LA countries
between 1986 and 1999.
Our results show that increasing exports of ‘dirty’ products to
the USA tends to raise
CO2 emissions in LA countries, while the opposite results
occur for growing imports
of those goods from the USA. Since the
effect of ‘dirty’ imports from the USA is larger
than the effect of ‘dirty’ exports to the USA, our results indicate
that the trade of ‘dirty’
products with the USA on the whole reduces CO2 emissions in
LA countries during the
estimation period.
April
2005
Yin-Wong Cheung (University of California, Santa Cruz) and Eiji
Fujii (University of Tsukuba)
"Cross-Country Relative Price Volatility: Effects of Market Structure"
Review of International Economics
<efujii@sk.tsukuba.ac.jp>
Using annual data on nine manufacturing sectors of eighteen OECD
countries, the article studies the implications of market
structure for cross-country relative price variability. It is
found that, in accordance with predictions from a standard markup
pricing model, reductions in market competition, along with
increased nominal exchange rate volatility, are associated with
greater variability of cross-country relative prices. The market
structure also has similar effects on components of cross-country
relative price variability. The empirical findings are robust to
the inclusion of various control variables and alternative sample
specifications.
Shigeto Kitano (Wakayama University)
" The Government’s Foreign Debt
in the Argentine Crisis "
Review of Development Economics
<kitano@eco.wakayama-u.ac.jp>
Though
the government had adopted a currency board regime since 1991,
the Argentine economy suffered a currency crisis in 2002. It is shown
that
currency crises can arise even under currency board systems in which
the
central bank has enough international reserves to respond to arbitrary
withdrawals
by individuals. The model implies that a government's rapid
accumulation of
foreign debt should be included as a major predictor of currency crises.
Takumi
Naito (Tokyo Institute of Technology)
"Tariff and tax reform: dynamic implications"
Journal of International Economics
<tnaito@soc.titech.ac.jp>
In an endogenously growing small open economy with a capital good and a
consumption good, we characterize the optimal combination of an import
tariff
and consumption taxes under the revenue neutrality constraint. Focusing
on the
case in which the economy imports the capital good, we obtain two main
results. First, consumption of the capital good is distorted more than
the
consumption good at the optimum. Second, the optimal tariff rate is
positive,
implying that free trade is not optimal even for a small open economy
with no
market failure.
Hiroshi Mukunoki (Gakushuin University) and Kentaro Tachi (Nihon Fukushi University)
"Multilateralism and Hub-and-Spoke Bilateralism"
Review of International Economics
<hiroshi.mukunoki@gakushuin.ac.jp>
The paper studies sequential negotiations of bilateral free trade agreements
in an oligopoly model. Expansion of trading blocs by overlapping trade agreements
allows an option of hub-and-spoke system and achieves multilateral free
trade as the equilibrium path, even if expansion of trading blocs by acceptance
of new members is infeasible. Results suggest that free trade areas (FTAs) tend
to expand more than customs unions (CUs). Lobbying by a producer can either
promote or undermine the realization of multilateral free trade by overlapping
FTAs.
Makoto Yano (Keio University) and Fumio Dei (Kobe University)
"Network
Externalities, Discrete Demand Shifts, and Sub-Marginal-Cost Pricing"
Canadian
Journal of Economics
<dei@kobe-u.ac.jp>
The
introduction of a new product often causes a massive (discrete) demand
shift to
the new product.
This study demonstrates that if a large-scale demand shift to
a new product is accompanied
by network externalities, it may result in
"sub-marginal-cost pricing," by which the seller sets its price
below
the marginal cost. This finding casts new light on dumping and
safeguard issues
in the real world.
March
2005
Akihiko Yanase (Takasaki City University of Economics)
"Pollution Control in Open Economies:
Implications of Within-period Interactions for Dynamic Game Equilibrium"
Journal of Economics
<yanase@tcue.ac.jp>
This paper examines a two-country, dynamic
game model of pollution control in the
presence of economic interactions between
countries within a period, as well as
the environmental interaction between periods
(i.e., a change in the stock of
global pollution). These economic interactions
emerge because of changes in the
terms of trade of polluting goods or the
market share of domestic polluting industries.
It is shown that if within-period
externalities exist, a noncooperative equilibrium may
result in a smaller stock of global pollution
in the steady state than does international
cooperation. Moreover, the properties of
equilibrium paths depend on the direction
and size of such externalities. In addition,
trigger strategy equilibria that achieve
the outcome of the collusive solution are
examined.
Nobuhito
Suga (Nagoya University)
"International
Economies of Scale and the Gains from Trade"
Journal
of Economics
<suga@aurora.ocn.ne.jp>
This
paper presents a two-country trade model with external economies of
scale
that emerge on an international level but are partially localized in
each country.
First, we show that in the trading equilibrium, the larger country
exports the good
produced in an industry with external economies of scale. Second, we
investigate
the welfare effects of trade for the following two cases: (I) the case
where external
economies are completely localized in autarky; (II) the case where
external economies
are internationally effective in autarky. In Case (II), it is shown
that trade can be
welfare-decreasing for both countries.
Masahiro Endoh (Keio University)
"Quality of Governance and the Formation of Preferential Trade Agreements"
Review of International Economics
<endoh@fbc.keio.ac.jp>
This paper investigates economic and political factors which explain the
presence or absence of Preferential Trade Agreements (PTAs). A model of
three countries with imperfect competition markets is employed for
theoretical analysis of political economy. The validity of theoretical
results is tested by econometric analysis with a logit model. It is
shown that countries with similar incomes are more likely to form PTAs,
and that governments with low quality of governance have little
incentive to form PTAs.
Masahiro Endoh (Keio University)
"The Effects of the GSTP on Trade Flow: Mission Accomplished?"
Applied Economics
<endoh@fbc.keio.ac.jp>
This paper investigates whether the Global System of Trade Preferences
among Developing Countries (GSTP) achieves its intent to increase the
trade of capital goods between member countries. For this purpose,
trade data disaggregated by the degree of commodity differentiation and
various GSTP regional dummies are employed in a gravity equation.
Estimation results say that the value of trade between GSTP member
countries has increased significantly since the formation of the GSTP in
1989, and the trade of differentiated commodities has increased
remarkably compared with other commodities. Therefore, we can assert
that the mission of the GSTP has been accomplished successfully.
Masao Oda( Kansai University)
“On the New Export Sector in Developing
Countries”
International
Economic Journal
<moda@kansai-u.ac.jp>
Developing a three
sectors three factors
model with tariff, this paper considers
the condition under which an acceptance
of direct investment is desirable
for developing countries. We show that an
acceptance of direct investment
increase the output of both new export and
traditional export sector and
promote the export-led growth in developing
countries.
Masao Oda( Kansai University)
“Voluntary Import Expansion and Direct
Investment”
Japanese
Economic Review
<moda@kansai-u.ac.jp>
This paper analyzes the welfare effects of
a market-share Voluntary Import Expansion (VIE)
in the presence of foreign direct investment utilizing a
duality approach. Introducing
the cost burden of VIE explicitly, this paper
considers the conditions under which
a market-share VIE is voluntary for the
importing country. It is shown that the voluntary nature
of VIE depends on the
capital import effects, the cost burden effects, and the price
difference
effects
and that a VIE is voluntary if it is accompanied by direct investment.
February 2005
Noritsugu
Nakanishi and Toru Kikuchi (Kobe University)
"Expansion of Network Integrations: Two Scenarios, Trade Patterns, and
Welfare"
Journal of Economic Integration
<nakanishi@econ.kobe-u.ac.jp>
We present two different scenarios of expanding the communication
networks
(through which the intermediate business services are traded) and
examine their
consequences on trade patterns in goods and welfare of the countries.
The first scenario is
the "successive expansion" of a single network integration and the
second one is
the "parallel expansion" of plural network integrations. We show that
the former can
have harmful effects on the outside countries, while the latter can be
"Pareto-improving"
in each stage of the network expansion.
Ryuhei
Okumura and Dapeng Cai ( Nagoya University )
"Sustainable Constant Consumption in a Semi-open Economy with
Exhaustible Resources"
Japanese Economic Review
<okumura@soec.nagoya-u.ac.jp>
To sustain constant consumption, Hartwick’s rule prescribes reinvesting
all resource rents in reproducible capital.
However, Hartwick’s rule is not necessarily the result of optimization.
In this paper, we address this insufficiency
by deriving a constant consumption path endogenously in a semi-open
economy with an exhaustible resource,
which has full access to world goods and capital markets, while the
resource flows are not internationally tradable.
Our findings show that, due to the essentiality of both capital and
resource to the production process,
the economy transforms its domestic assets into foreign ones, ending up
consuming a constant interest flow from the latter.
Akihiko Yanase (Takasaki City University of Economics)
"Dynamic Voluntary Provision of Public Goods and Optimal Steady-state
Subsidies"
Journal of Public Economic Theory
<yanase@tcue.ac.jp>
This paper examines a differential game model of voluntary provision of
a public good in which
private agents' contributions accumulate over time and derives subsidy
rules that achieve
the socially efficient steady state. It is shown that the optimal
subsidy rule is a simple one
when agents use the open-loop strategy, while under Markovian
strategies it intricately
depends on the parameters of the economy.
Akihiko Yanase (Takasaki City University of Economics)
"Reconsideration of the Relationship between Environmental Regulation
and Comparative Advantage:
The Role of Environmental Externalities on the Production Side"
Keio Economic Studies
<yanase@tcue.ac.jp>
The conventional view of the literature on trade and the environment is
that
tighter environmental policy leads to a country's comparative
disadvantage
in polluting goods. This paper re-examines such the relationship
between
environmental policy and comparative advantage by introducing negative
externalities
of pollution on the production side (productivity and/or factor
endowments) into
the standard Heckscher-Ohlin model. It is shown that, depending on the
externality effects,
tighter environmental policy may lead to a decrease in the autarky
relative price
of a pollution-intensive good.
Yin-Wong Cheung (University of California, Santa Cruz), Menzie
Chinn (University of Wisconsin, Madison) and Eiji Fujii
(University of Tsukuba)
"Dimensions of Financial Integration in Greater China: Money
Markets, Banks and Policy Effects"
International Jounral of Finance and Economics
<efujii@sk.tsukuba.ac.jp>
The financial linkages between the People’s Republic of China
(PRC) and the other Greater China economies of Hong Kong and
Taiwan are assessed, and compared against those of the PRC with
Singapore, Japan and the United States. For both sets of links,
there is evidence that ex post uncovered interest parity tends to
hold over longer periods, and the magnitude of the parity
deviations are shrinking over time. The deviations depend upon
the extent of capital controls, and in certain cases, exchange
rate volatility. We, then, discuss how relevant this measure of
international financial integration is for domestic financial
intermediation overall. Using an error correction model, we find
that for the PRC and Taiwan bank lending rates and interbank
rates share essentially no covariability. The utter disconnection
of bank lending rates from interbank rates makes a stark contrast
with the results for the United States that indicate one-for-one
comovement between the two rates. These empirical results imply
that, while the money markets of the PRC are increasingly linked
to money markets in the rest of the world, the banking sector -
the main source of capital for Chinese firms - remains insulated.
Jota Ishikawa (Hitotsubashi University) and Tomohiro Kuroda
(Hitotsubashi University)
"Export Subsidies versus Export Quotas with Incompletely Informed
Policy Makers"
Japanese Economic Review
<
jota@econ.hit-u.ac.jp> <
ce00720@srv.cc.hit-u.ac.jp>
This paper analyzes export subsidies (price incentives) and export
quotas (quantity controls)
in the Brander-Spencer (1985) model when policy makers have limited
information on demand
and cost structures. We examine necessary or sufficient
information for policy makers to determine
the right policies. It is crucial that they know the elasticity values
of the slope of the inverse demand
curve and the market share. It is also shown that for policy makers,
export quotas are superior to
export subsidies under certain conditions.
January 2005
Nobuhito Suga (Nagoya University)
"An
Analysis of Transboundary Pollution and the Gains from Trade:
Reconsideration"
Pacific
Economic Review
<suga@aurora.ocn.ne.jp>
This
paper investigates the effects of transboundary pollution on trade and
welfare
in a two-country, tow-good, one-factor model, in which pollution is
treated as a negative
cross-industry externality. It is shown that trade may improve
countries' natural environment
and consequently raises the countries' welfare if a comparative
advantage in a pollution-
producing good is held by a country that greatly surpasses the other in
pollution abatement
technology. This result has not been obtained from existing models of
this type.
Jota Ishikawa (Hitotsubashi University) and Kazuharu Kiyono (Waseda University)
"Green-Gas Emission Controls in an Open Economy"
International Economic Review
To examine how greenhouse-gas emission controls affect country's industrial
and trade structures, this paper presents an open economy model that has
both Ricardian and Heckscher-Ohlin features. We specifically compare
emission quotas, emission taxes and emission standards. The patterns of
production and trade critically hinge on those policy tools. It is shown
that a domestic emission control may lead to carbon leakage and may not
reduce the world emission and that emission standards may work as a "hidden"
production subsidy towards an emission-intensive industry.
Yunfang
Hu (Kobe University)
and Kazuo Mino (Osaka University)
"Schooling, Working Experiences, and Human Capital Formation"
Economics Bulletin
<hu@rieb.kobe-u.ac.jp>, <mino@econ.osaka-u.ac.jp>
This paper assumes that human capital is a
composite
of two types of
knowledge and skills: one is accumulated by formal education in
schools
and the other is accumulated through working experiences in
production
activities. Introducing such a concept of human capital into the
standard
Lucas-Uzawa model of endogenous
growth, we show
that a higher rate of
long-run growth is not necessarily associated with a higher level
of education
attainment.