2011

 

Yukio Karasawa-Ohtashiro and Akihiko Yanase Asia-Pacific Journal of Accounting & Economics

Akihiko Yanase and Weijia Dong Asia-Pacific Journal of Accounting & Economics

Takumi Naito Journal of International Economics

Tsuyoshi Toshimitsu Metroeconomica

Kenji Fujiwara Economics Letters
Kenji Fujiwara and Ngo Van Long Dynamic Games and Applications
Yasuhiro Takarada, Weijia Dong, and Takeshi Ogawa Review of International Economics

Kozo Kiyota Journal of International Economics

Takumi Naito Japanese Economic Review

Kazuhiro Takauchi Economics Bulletin

Wanida Ngienthi, Yan Ma, and Fumio Dei Review of International Economics

Shigeto Kitano Journal of Macroeconomics

Kozo Kiyota Review of International Economics

Kozo Kiyota Review of World Economics

Kozo Kiyota Contemporary Economic Policy

Wolfgang Eggert, Jun-ichi Itaya, and Kazuo Mino Journal of Economic Behavior and Organization

Seiya Fujisaki and Kazuo Mino Economics Bulletin

Angus C. Chu and Yuichi Furukawa Journal of Economic Dynamics and Control

Akihiko Yanase Journal of Economic Dynamics and Control

Yoshinori Kurokawa Economics Letters

Kenji Fujiwara Australian Economic Papers

Tetsuya Saito Journal of Industrial Organization Education

Jota Ishikawa, Kazuharu Kiyono, and Morihiro Yomogida Japanese Economic Review

Wanida Ngienthi and Fumio Dei Review of International Economics

Yasushi Kawabata Manchester School

Akihiko Yanase FinanzArchiv

Masao Oda and Koji Shimomura Review of International Economics

 

December 2011

 

Yukio Karasawa-Ohtashiro (Nanzan University) and Akihiko Yanase (Tohoku University)
gA Dynamic International Trade Model with Endogenous Fertilityh
Asia-Pacific Journal of Accounting & Economics
This paper examines a two-country dynamic general equilibrium model with endogenous fertility. We show that the introduction of child-rearing behavior brings about new properties in long-run dynamics. After an analysis of the existence, uniqueness, and local stability of the long-run equilibrium, we examine the international trade pattern and comparative statics in order to identify the differences with the standard dynamic international trade model.

Akihiko Yanase (Tohoku University) and Weijia Dong (Nagoya University)
gOpen-Access Renewable Resources as Inputs and International Trade: A Small Open Economyh
Asia-Pacific Journal of Accounting & Economics
This paper develops a small-open-economy model in which two final goods are produced by using a primary factor and a resource good, which has an open-access property and is produced from the primary factor. Under the assumption that only the final goods are tradable, the economyfs patterns of specialization both in the temporary equilibrium and in the steady state are derived. It is shown that in the steady state, the economy either completely specializes in one good or diversifies production, depending on the labor endowment and the growth rate of the resource. The long-run effects of trade on the resource stock and national welfare are also examined.

 

November 2011

 

Takumi Naito (Waseda University)

gA Ricardian model of trade and growth with endogenous trade statush

Journal of International Economics

We formulate a two-country, continuum-good Ricardian model of trade and endogenous growth with endogenous trade status. After establishing the existence, uniqueness, and global stability of a balanced growth path, we show that, compared with the old balanced growth path, a permanent fall in the trade cost in any one country: (i) raises the growth rates of capital in all countries for all periods; (ii) increases both the range of the imported varieties and that of the exported varieties in all countries for all periods; and (iii) raises welfare in all countries. Our theoretical predictions are qualitatively consistent with the empirical evidence.

 

Tsuyoshi Toshimitsu (Kwansei Gakuin University)

gNOTE ON THE WELFARE EFFECT OF SECOND-BEST POLICIES IN A NETWORK INDUSTRY: A MONOPOLY CASEh

Metroeconomica

We show that the welfare effect of second-best policies such as a subsidy/tax and quality regulation in the case of a monopoly in a network industry depends on the strength of network effects. That is, focusing on the case in which the network effect is smaller (larger) than the marginal cost of production for the small (large) network effect, it is demonstrated that in the case of a small (large) network effect, an output and a quality-improving subsidy (tax) policy are socially optimal, and a government should commit to a minimum (maximum) quality standard.

 

Kenji Fujiwara (Kwansei Gakuin University)

gVoracity, growth and welfareh
Economics Letters
This paper explores some implications of the comparison between feedback Nash and Stackelberg equilibria for growth and welfare in a `voracity' model. We show that as compared to the Nash equilibrium, the Stackelberg equilibrium involves a lower growth rate while it leaves both the leaders and the followers better off, i.e., the Stackelberg equilibrium is Pareto superior to the Nash equilibrium.

Kenji Fujiwara (Kwansei Gakuin University) and Ngo Van Long (McGill University)
gWelfare implications of leadership in a resource market under bilateral monopolyh
Dynamic Games and Applications
Formulating a dynamic game model of a world exhaustible resource market, this paper studies welfare implications of Stackelberg leaderships for an individual country and the world. We overcome the problem of time-inconsistency by imposing a ''credibility condition'' on the Markovian strategy of the Stackelberg leader. Under this condition, we show that the presence of a global Stackelberg leader leaves the follower worse off relative to the Nash equilibrium. Moreover, the world welfare is highest in the Nash equilibrium as compared with the two Stackelberg equilibria.

 

Yasuhiro Takarada (Nanzan University), Weijia Dong (Nagoya University), and Takeshi Ogawa (Nagoya University)
gShared Renewable Resources: Gains from Trade and Trade Policyh
Review of International Economics
This paper examines the effects of international trade and trade policy in a two-country, two-good model with an open-access renewable resource that is internationally shared. We show that both countries may still benefit from trade when they specialize in the production of their comparative advantage good, although the shared resource is reduced by trade. In addition, we demonstrate that the steady state utility of a resource-good importing country may be reduced by trade, even if it specializes in the production of a non-resource good. Import tariffs and export taxes on a resource good may increase or decrease the shared stock level depending on the production patterns in a trading steady state. The trade policy is likely to be Pareto-improving when the shared stock rises, while both countries may be made worse off by the trade policy when the shared stock falls.

 

October 2011

 

Kozo Kiyota (Yokohama National University)

gA Many-cone World?h
Journal of International Economics
The breakdown of global factor price equalization, or a single-cone world, is a central concern in various fields of economics. This paper examines the empirical validities of the following two claims: 1) the multiple-cone Heckscher-Ohlin (HO) model fits better than does the single-cone HO model; and 2) increases in the number of cones improve the fit of the model. One of the contributions of this paper is that it focuses simultaneously on factor endowments, production patterns, and wage disparities across economies. My empirical results support the first claim but not the second claim. The results suggest that although the multiple-cone model performs better than does the single-cone model, the increases in the number of cones do not necessarily result in better performance of the HO model.

 

August 2011

 

Takumi Naito (Waseda University)

gAid for trade and welfareh

Japanese Economic Review

A new foreign aid initiative called Aid for Trade is intended to improve a recipient's trade-related infrastructure which lowers its trade costs. We formulate a two-country, continuum-good Ricardian model, where each country's transport cost is inversely related to its effective public services which are subject to congestion. Our numerical experiments show that an increase in the donor's aid/GDP ratio within a certain range raises welfare in both countries if the recipient's relative income tax rate is sufficiently small.

 

Kazuhiro Takauchi (Onomichi University)

gRules of origin and international R&D rivalryh

Economics Bulletin

We study a three-country three-firm free trade area (FTA) trade model with rules of origin (ROO) under international R&D competition. The external tariff is chosen by the country importing final goods in the FTA. If the FTA chooses a higher content rate of ROO, the country importing final goods chooses a higher tariff in order to compensate for lower consumer surplus. We have three results. First, if the FTA raises the content rate, it raises the costs of exporters within the area, but if the R&D cost is sufficiently low, the exporters actually increase exports and their profits also increase. Second, if the firms within the FTA are less efficient than outsiders, the social welfare of countries importing final goods is affected by the content rate in a U-shaped fashion. A tightening of ROO may reduce the social welfare of importing countries since it may replace productive firms outside the FTA with less productive local firms. Third, if the productivity within an FTA is relatively high, the optimal content rate of ROO for the importing country within the FTA is 100%. In that case, the country importing final goods does not need to rely on imports from outside. Since an increase in the content rate of ROO increases external tariff, the most stringent ROO requirement is desirable for that country.

 

Wanida Ngienthi (Assumption University), Yan Ma (Kobe University), and Fumio Dei (Kobe University)

gSupermodularity and Global Supply Chains without the Southh

Review of International Economics

We investigate why the South is hardly involved in the global supply chain for the Boeing 787. We demonstrate that if the production process is supermodular, the South is excluded from global supply chains.

 

July 2011

 

Shigeto Kitano (Kobe University)

gCapital Controls and Welfareh
Journal of Macroeconomics
This paper computes welfare levels under different degree of capital controls and compares them with the welfare level under perfect capital mobility by using the methodology of Schmitt-Grohe and Uribe (2007). We show that perfect capital mobility is not always optimal and that capital controls may enhance an economy's welfare level. There exists an optimal degree of capital-account restriction that achieves a higher level of welfare than that under perfect capital mobility, if the economy has costly financial intermediaries. The results of our analysis imply that as the domestic financial intermediaries are less efficient, the government should impose stricter capital controls in the form of a tax on foreign borrowing.

 

Kozo Kiyota (Yokohama National University)
gPaths of Development and Wage Variationsh
Review of International Economics
In analyzing the relationship between factor endowments and sectoral per capita output (the paths of development), it was shown empirically that the number of cones was neither one nor three but two, and that all countries fall into one of these two cones. This is a puzzle, because it is inconsistent with large wage variations across economies. This paper attempts to solve this puzzle, introducing complete and incomplete specialization into a multiple-cone model. Empirical results reveal that the two-cone Heckscher-Ohlin (HO) model can be consistent with HO specialization and wage variations across economies.

Kozo Kiyota (Yokohama National University)

gA test of the law of comparative advantage, revisitedh
Review of World Economics
This paper reconsiders one of the fundamental results in trade theory: the law of comparative advantage from an empirical point of view. The contribution of this paper is to conduct a test of the law of comparative advantage that is consistent with both balanced and unbalanced trade. To do so, this paper utilizes not only net exports valued at autarky prices but also those valued at free trade prices. The results support the empirical validity of the law of comparative advantage even after trade imbalances are taken into account.

Kozo Kiyota (Yokohama National University)

gExports and Jobs: The Case of Japan, 1975-2006h
Contemporary Economic Policy
This paper asks how much employment is created by increasing goods and services exports and how the export dependence of employment has changed over time. Using the newly developed Japanese input-output table for 1975-2006, this paper estimates the effect of exports on an industryfs employment (i.e., direct effect) and the effect on other industries' employment (i.e., indirect effect). One of our major findings is that the magnitude of the indirect effect exceeded that of the direct effect over almost the entire period. This implies that more than half of the effects of exports appeared through intraindustry linkages. We also found the indirect effect of goods exports is not limited to goods industries. As a result, the increases in the export dependence of employment are not limited to major Japanese export-oriented industries such as electrical machinery, motor vehicles, and general machinery. In identifying the potential risks of negative external shocks, it is important for policy makers to estimate how much employment is indirectly as well as directly dependent on exports.

 

Wolfgang Eggert (University of Freiburg), Jun-ichi Itaya (Hokkaido University), and Kazuo Mino (Kyoto University)

gA Dynamic Model of Conflict and Appropriationh
Journal of Economic Behavior and Organization

This paper presents an extension of a static model of economic conflict analyzed by (Hirshleifer, 1991) and (Hirshleifer, 1995) and Skaperdas (1992) to an infinite horizon differential game. Our aim is to highlight the strategic role of appropriation among a smaller group of agents in an intertemporal context. The model yields the conclusion that there exists a unique linear/nonlinear Markov perfect equilibrium strategy, even when strategies are defined over the entire state space. We demonstrate that "partial cooperation" can be seen as a long-run response to conflict. Moreover, a decrease in the effectiveness of appropriation, the depreciation rate of a common-pool stock, the rate of time preferences or an increase in the "degree of noise" improves the degree of "partial cooperation" and thus welfare in an anarchic society.

 

Seiya Fujisaki (Shinshu University) and Kazuo Mino (Kyoto University)

gGrowth and Distributional Effects of Inflation with Progressive Taxationh

Economics Bulletin

This paper examines the growth and income distribution effects of inflation in a growing economy with heterogeneous households and progressive income taxation. Assuming that the cash-in-advance constraint applies to investment as well as to consumption spending, we show that a higher growth of monetary supply yields a negative impact on growth and an ambiguous effect on income distribution. Numerical examples with plausible parameter values, however, demonstrate that those long-run effects of money growth are rather small. In contrast, fiscal distortion caused by progressive taxation yields significant impacts on growth and distribution.

 

Angus C. Chu (Shanghai University of Finance and Economics, Durham University) and Yuichi Furukawa (Chukyo University)

gOn the Optimal Mix of Patent Instrumentsh
Journal of Economic Dynamics and Control
A special characteristic of the patent system is that it features multiple patent-policy levers that can be employed by policymakers. In this note, we develop an R&D-based growth model to analyze the optimal mix of patent instruments by considering patent breadth and the division of profit in research joint ventures. Our results are as follows. First, we analytically derive the optimal mix of patent breadth and the profit-division rule. Then, we calibrate the model to quantitatively evaluate the welfare gain from optimizing both patent instruments versus optimizing only patent breadth. We find that the welfare gain can be quantitatively significant.

 

June 2011

 

Akihiko Yanase (Tohoku University)
gImpatience, Pollution, and Indeterminacyh
Journal of Economic Dynamics and Control
This paper examines an equilibrium growth model in which production activities generate environmental pollution that has a negative welfare effect and in which individual households' subjective discount rate is a function of individual consumption, which is internal to each household, and of total pollution, which is an external factor to the individual agents. It is shown that there may exist multiple steady states and that the dynamic equilibrium may display indeterminacy, depending on the properties of the discount-rate function, the pollution-capital relationship in production technology, and the pollution-consumption relationship in instantaneous utility. The long-run effects of tighter environmental policy are subsequently examined, and the results are also found to be dependent on the above factors.

 

May 2011

 

Yoshinori Kurokawa (University of Tsukuba)

gIs a skill intensity reversal a mere theoretical curiosum? Evidence from the US and Mexicoh

Economics Letters

A rising skill premium in two countries can be explained by the Heckscher-Ohlin model assuming a "skill intensity reversal." This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called "factor intensity reversal." We now show clear-cut evidence for the existence of a skill intensity reversal.

 

Kenji Fujiwara (Kwansei Gakuin University)

gTariffs and trade liberalization with network externalitiesh

Australian Economic Papers

This paper constructs a reciprocal market model of intra-industry trade of network goods to consider the implications of network externalities for an optimal tariff policy and the welfare effects of bilateral tariff reductions. We show that the degree of network externalities nontrivially affects the sign of the Nash equilibrium tariff. Then, we prove that network externalities amplify the gains from tariff reductions. These results help better understand the implications of trade-related issues in network industries.

 

Tetsuya Saito (SUNY at Buffalo)

gHow Do We Get Cobb-Douglas and Leontief Functions from CES Function: A Lecture Note on Discrete and Continuum Differentiated Object Modelsh

Journal of Industrial Organization Education

Most lectures teach the relationship between the CES, Cobb-Douglas and Leontief functions using the value of elasticity of substitution, namely in the discrete object model. This lecture note aims at being a reference for algebraic computations of the Leontief and Cobb-Douglas functions by taking limits of CES functions both in discrete and continuum goods models. The argument on the discrete case uses l'Hôpital's rule as usually done. The argument on the continuum case also uses l'Hôpital's rule to show the convergence to the Cobb-Douglas function. To show the convergence to the Leontief function, however, we rely on the squeeze principle.

 

Jota Ishikawa (Hitotsubashi U), Kazuharu Kiyono (Waseda U), and Morihiro Yomogida (Sophia U)
gIs Emission Trading Beneficial?h

Japanese Economic Review

<http://hermes-ir.lib.hit-u.ac.jp/rs/handle/10086/18961>
We develop a two-country (North and South), two-good, general equilibrium model of international trade in goods and explore the effects of domestic and international emission trading under free trade in goods. Whereas domestic emission trading in North may result in carbon leakage by expanding South's production of the emission-intensive good, international emission trading may induce North to expand the production of the emission-intensive good by importing emission permits. Emission trading may deteriorate global environment. North's (South's) emission trading may not benefit South (North). International emission trading improves global efficiency but may not benefit both countries.

 

April 2011

 

Wanida Ngienthi (Assumption University) and Fumio Dei (Kobe University)

gThe Impact of Differential Falls in Offshoring Costs on Welfareh

Review of International Economics

We highlight the fact that offshoring firms and local firms that do not offshore coexist in the North. Adopting Dei's (2010) approach to offshoring, we demonstrate that a fall in offshoring costs in any sector makes the South better off and that if offshoring costs in a high-technology sector fall at a faster rate, the North is worse off, and vice versa.

 

March 2011

 

Yasushi Kawabata (Nagoya City University)

gCost Asymmetries and Industrial Policy in Vertically Related Marketsff

Manchester School

In this paper we examine how the conventional finding from de Meza (Canadian Journal of Economics, Vol. 19 (1986), pp. 347-350) and Neary (Journal of International Economics, Vol. 37 (1994), pp. 197-218) that the country with the lowest-cost firm provides the highest subsidy modifies in a model of vertically related markets characterized by Cournot competition. We show that the country where the sum of the costs of final-good production and intermediate-good production are the lowest provides the largest production subsidies to the final good and/or the intermediate good.

 

January 2011

 

Akihiko Yanase (Tohoku University)
gTariff and Environmental Tax Reforms in a Polluted Small Open Economy with Public Productionh
FinanzArchiv
This paper presents a general-equilibrium model of a small open economy, in which the production process of private goods generates pollution, and the government finances the production cost of a public consumption good through revenue from tariffs and pollution taxes. Since a variety of distortions, including pollution, trade protection, and public production, exist, a change in tariffs and/or environmental taxes affects economic welfare, both directly and indirectly. Taking these effects into account, the conditions for welfare-enhancing, piecemeal policy reform are derived.

 

Masao Oda (Ritsumeikan University) and Koji Shimomura (Kobe University)
gA Model of Welfare Enhancing Capital Importsh
Review of International Economics
This paper proposes a model of welfare enhancing capital imports in a multi-dimensional framework. Contrary to the pessimistic conventional wisdom of capital imports and welfare, we provide a justification for the acceptance of foreign capital in developing countries.