2013
Hiroshi
Daisaka and Taiji Furusawa Review of
International Economics
Takashi
Kamihigashi Economic
Theory Bulletin
Takashi
Kamihigashi and John Stachurski
Fixed Point Theory and Applications
Takashi
Kamihigashi Economic
Theory
Naoto
Jinji and Tsuyoshi Toshimitsu
Japan and the World Economy
Naoto
Jinji and Tsuyoshi Toshimitsu
Review of Development Economics
Naoto
Jinji Review of International Economics
Tsuyoshi
Toshimitsu Journal
of Industry, Competition and Trade
Seiya Fujisaki Economic Modelling
Eric
W. Bond and Yan Ma Pacific Economic
Review
Morihiro Yomogida and Nori Tarui Pacific Economic Review
Been-Lon Chen, Yu-Shan Hsu, and Kazuo Mino Macroeconomic Dynamics
Keisaku Higashida and
Shunsuke Managi Environment
and Development Economics
Daisuke
Ichinose, Keisaku Higashida,
Takayoshi Shinkuma, and Michikazu
Kojima Environment and Development
Economics
Tsuyoshi
Toshimitsu International
Economic Journal
Yiyong Cai,
Takashi Kamihigashi, and John Stachurski
Journal of Mathematical Economics
Tsuyoshi
Toshimitsu The World Economy
Yuichi
Furukawa Economics Letters
Yin-Wong
Cheung and Eiji Fujii
International Journal of Finance and
Economics
Tetsuro Mizoguchi and
Nguyen Van Quyen Journal
of Public Economic Theory
Kazuhiro
Takauchi Journal
of Industry, Competition and Trade
Yushi Yoshida North American Journal of Economics and Finance
Asuka Oura and
Tadashi Morita Economic Modelling
Takashi
Kamihigashi and John Stachurski
Theoretical Economics
Been-Lon Chen, Yu-Shan Hsu and Kazuo Mino Journal of Economics
Taketo
Kawagishi and Kazuo Mino Economics Bulletin
Yunfang Hu and Kazuo Mino Journal of International Economics
December
2013
Hiroshi
Daisaka (Hitotsubashi
University) and Taiji Furusawa
(Hitotsubashi University)
gDynamic
Free Trade Networks: Some Numerical Resultsh
Review of
International Economics
The paper is the
first to comprehensively simulate FTA evolution in various environments. The
analysis unveils that FTA networks often evolve to a partition of the world
into a small number of groups of asymmetric size due to the negative
externality caused by preference erosion.
November
2013
Takashi
Kamihigashi (Kobe University)
gAn Order-Theoretic Approach to Dynamic Programming: An Expositionh
Economic Theory Bulletin
In
this note, we discuss an order-theoretic approach to dynamic programming.
In particular, we explain how order-theoretic fixed point theorems can be
used to establish the existence of a fixed point of the Bellman operator, as
well as why they are not sufficient to characterize the value function.
By doing this, we present the logic behind the simple yet useful result
recently obtained by Kamihigashi (2013) based on this
order-theoretic approach.
Takashi
Kamihigashi (Kobe University) and John Stachurski (Australian National University)
gSimple
Fixed Point Results for Order-Preserving Self-Maps and Applications to
Nonlinear Markov Operatorsh
Fixed Point Theory and Applications
Consider
a preordered metric space (X, d, <=). Suppose that d(x,y) <= d(x',y')
if x' <= x <= y <= y'$. We say that a self-map T on X is asymptotically contractive if d(T^i x, T^i y) -> 0 as i -> infinity for all x, y in X. We show that an
order-preserving self-map T on X has a globally
stable fixed point if and only if T is asymptotically contractive and there
exist x, x* in X such that T^i x <= x* for any natural
number i and x* <= T x*. We establish this
and other fixed point results for more general spaces where d consists of a
collection of distance measures. We apply our results to order-preserving
nonlinear Markov operators on the space of probability distribution functions
on R.
Takashi
Kamihigashi (Kobe University)
gElementary Results on Solutions to the Bellman Equation of Dynamic
Programming: Existence, Uniqueness, and Convergenceh
Economic Theory
We
establish some elementary results on solutions to the Bellman equation without
introducing any topological assumption. Under a small number of conditions, we
show that the Bellman equation has a unique solution in a certain set, that
this solution is the value function, and that the value function can be computed
by value iteration with an appropriate initial condition. In addition, we show
that the value function can be computed by the same procedure under alternative
conditions. We apply our results to two optimal growth models: one with a
discontinuous production function and the other with ``roughly increasing"
returns.
Naoto
Jinji (Kyoto University) and Tsuyoshi Toshimitsu (Kwansei Gakuin University)
gStrategic R&D Policy in a Quality-Differentiated Industry with Three
Exporting Countriesh
Japan and the World Economy
We
examine strategic research and development (R&D) policy for
quality-differentiated products in a third-market trade model. We extend the
previous work by adding a third exporting country, so that the market structure
is international triopoly. We show that the presence
of the third exporting country affects strategic R&D policies. With three
exporting countries, the lowest-quality exporting country gains from taxing
domestic R&D and the middle-quality exporting country gains from subsidizing
domestic R&D under both Bertrand and Cournot
competition. As in the duopoly case, however, the optimal unilateral policy for
the highest-quality exporting country depends on the mode of competition.
Various cases of policy coordination by exporting countries are also examined.
Naoto Jinji (Kyoto University) and Tsuyoshi Toshimitsu (Kwansei Gakuin University)
gStrategic Investment Subsidies under Asymmetric Oligopolyh
Review of Development Economics
This paper examines strategic investment subsidies in an international
oligopoly. We construct a general oligopoly model in which firms compete in two
stages and governments commit to investment subsidies prior to firms' actions.
We consider asymmetry among firms that arises from the nature of goods they
produce rather than their cost structures. When firms produce asymmetrically
differentiated goods, we find that a change in the number of foreign
competitors may alter the sign of the optimal unilateral investment subsidy. An
example of policy reversal is provided in the case of strategic research and
development subsidies for a quality-differentiated industry.
Naoto Jinji (Kyoto University)
gIs Corporate Environmentalism Good for Domestic Welfare?h
Review of International Economics
Many private firms voluntarily care about the environment and declare that
their products and production processes are environmentally friendly. This
paper shows that corporate environmentalism may reduce the effectiveness of
government policies. A simple third-market trade model with strategic
environmental and trade policy is employed, in which an environmentally
conscious domestic firm competes with a profit-maximizing foreign firm. It is
shown that even if emission taxes and export subsidies are both available,
corporate environmentalism may reduce domestic welfare when pollution is transboundary. In the realistic situation where export
subsidies are prohibited, welfare may fall even if pollution is local.
October
2013
Tsuyoshi
Toshimitsu (Kwansei Gakuin University)
gCompatibility under Differentiated Duopoly with Network Externalities: A
Commenth
Journal of Industry, Competition and
Trade
Chen
and Chen (2011) analyze the effects of compatibility under system product Cournot competition with network externalities. They show
that a firmfs optimal strategy is to set an incompatible system standard, even
though perfect compatibility is socially optimal. In this case, a social
dilemma arises. However, their result depends on a specific assumption about
the network size. We use the framework of Shy (1995) to modify this assumption,
and hence show that the social dilemma identified by Chen and Chen (2011) does
not arise.
Seiya Fujisaki (Shinshu
University)
gTaylor
rules and equilibrium determinacy in a two-country model with non-traded goodsh
Economic
Modelling 35,
pp.597-603
We analyze a
relation between interest rate controls and equilibrium determinacy using a
two-country model featuring traded and non-traded goods. In addition, parameters
of preference and production may differ between the two countries. We find that
macroeconomic stability strongly depends on such heterogeneity including
monetary policy, and that it is easier to generate determinate equilibrium
under perfect liberalization of the economy, but to operate monetary policy in
the economy with non-traded goods.
Eric W. Bond (Vanderbilt University) and Yan Ma (Kobe
University)
gLearning by Doing and Fragmentationh
Pacific
Economic Review
We analyze the
competitive equilibrium and socially optimal allocation of production fragments
in a two country model where there is learning by doing with spillovers between
fragments in the home country. We distinguish between forward and backward
knowledge linkages, where learning results from producing products that are
less (more) complex than the current knowledge frontier with forward (backward)
linkages. We compare the pattern of comparative advantage in the competitive
and socially optimal cases, and compare the intensive and extensive margins of
fragments produced at home in the two cases. We establish a sufficient
condition for the range of fragments produced at home to be non-decreasing with
forward linkages. We also show that with backward linkages, the home country
will produce some fragments in the neighborhood of the steady state that are
more complex than those produced in the steady state.
Morihiro Yomogida
(Sophia University) and Nori Tarui
(University of Hawaii)
gEmission
Taxes and Border Tax Adjustments for Oligopolistic Industriesh
Pacific Economic
Review
We examine the
welfare consequence of emission tax with and without a Border Tax Adjustment
for an imperfectly competitive industry, where intra-industry trade arises
between countries. BTA allows a government to impose a pollution-content tariff
on imports and refund an emission tax for export sales. We analyze the
structure of an optimal emission tax with BTA when a government chooses its
emission tax rate to maximize its national welfare. We show that the optimal
emission tax policy with BTA achieves greater national welfare and higher
environmental quality than the optimal policy without BTA.
September
2013
Been-Lon Chen, Yu-Shan Hsu, and Kazuo Mino
gWelfare
Implications and Equilibrium Indeterminacy in a Two-sector Growth Model with
Consumption Externalitiesh
Macroeconomic Dynamics
One-sector
neoclassical growth models reveal that consumption externalities lead to
inefficient allocation in a steady state and indeterminate equilibrium toward the
steady state only if there is a labor-leisure tradeoff. This paper shows that
in a two-sector neoclassical growth model, even without a labor-leisure
tradeoff, consumption spillovers easily lead to inefficient allocation in a
steady state and indeterminate equilibrium toward the steady state. Consumption
spillovers that yield over-accumulation of capital in an otherwise identical
one-sector model may lead to under-accumulation of capital in two-sector models
depending on relative capital intensities and relative degrees of
externalities. Moreover, a two-sector model economy with consumption
externalities is less stabilized than an otherwise identical one-sector model
economy with consumption externalities.
August
2013
Keisaku Higashida (Kwansei Gakuin University) and Shunsuke Managi (Tohoku
University)
gDeterminants
of Trade in Recyclable Wastes: Evidence from Commodity-Based Trade of Waste and
Scraph
Environment
and Development Economics
This paper
examines factors that affect the trade of recyclable waste in both
exporting and importing countries. To this end, we employ two important
elements: first, we adopt a gravity model in our empirical methodology; second,
we select five waste and scrap commodities and
undertake estimations using commodity-level trade data. We demonstrate
that, the higher the wage/per capita GDP/population of an importing
country, the more recyclable wastes it imports. This result suggests that the
demand for final goods, and accordingly, the demand for materials including
recycled material, have strong effects on the import volume of recyclable
waste. Moreover, this implies that the imports of a developing country from
developed countries increase with expanding industrial activity and economic
growth. We find no evidence for a pollution haven for wastes and recycling.
Daisuke
Ichinose (Rikkyo University), Keisaku
Higashida (Kwansei Gakuin University), Takayoshi Shinkuma
(Kansai University), and Michikazu Kojima (Institute
of Developing Economies)
gShould the trade
of hazardous waste be uniformly regulated? An empirical analysis of export
demand for ewaste and scrapfh
Environment and Development Economics
We examine the substitutability of waste and scrap exported from
different countries by estimating the export demand functions of China. In
particular, we focus on the export of other ferrous waste and scrap (HS
code 720449) and other waste, parings and scrap of plastics (HS
code 391590). It is shown that the substitutability of these wastes and scraps
is weak among the exporting countries. Our empirical results imply that a
uniform ban on trading hazardous waste, represented by the Basel Ban, could be
an inefficient environmental policy.
Tsuyoshi
Toshimitsu (Kwansei Gakuin University)
gStrategic product R&D investment policy under international rivalry in the
presence of demand spillover effectsh
International Economic Journal
We
develop a model of product (i.e., quality-improving) research and development
(R&D) investment competition in a horizontally differentiated duopoly. In
particular, based on a third-country market model, we consider the optimal
product R&D investment policy under international rivalry in the presence
of demand spillover effects associated with improving the quality level of a
product. We show how the optimality of a noncooperative
and a cooperative R&D investment policy depends on the strength of demand
spillover effects. Furthermore, we consider the same issues in the case of
heterogeneous consumers and alternative utility functions.
Yiyong Cai
(Commonwealth Scientific and Industrial Research Organisation
& Australian National University), Takashi Kamihigashi
(Kobe University), and John Stachurski (Australian
National University)
gStochastic
Optimal Growth with Risky Labor Supplyh
Journal of Mathematical Economics
Production
takes time, and labor supply and profit maximization decisions that relate to
current production are typically made before all shocks affecting that
production have been realized. In this paper we re-examine the problem of
stochastic optimal growth with aggregate risk where the timing of the model
conforms to this information structure. We provide a set of conditions
under which the economy has a unique, nontrivial and stable stationary
distribution. In addition, we verify key optimality properties in the
presence of unbounded shocks and rewards, and provide the sample path laws
necessary for consistent estimation and simulation.
July
2013
Tsuyoshi
Toshimitsu (Kwansei Gakuin University)
gThe Role of GATT/WTO as a Commitment Device in the Presence of a Time Lag:
Free Trade, Time-Consistent Tariff Policy, and Market Sizeh
The World Economy
We
consider whether a free trade policy is superior to tariff policies in the
presence of a time lag between production and trade decisions. We show that the
preferable choice between a free trade policy and a time-consistent tariff
policy depends on the market size of the importing country. However, because a
free trade policy itself is not necessarily credible in the presence of a time
lag, the importing country requires an international organization such as
GATT/WTO as a commitment device. Accordingly, employing a noncooperative
game approach, we analyze under what conditions becoming a member of such an
international organization is a subgame perfect Nash
equilibrium and show that free trade under the GATT/WTO regime is Pareto
improving for the importing and exporting countries.
Yuichi
Furukawa (Chukyo University)
gThe Struggle to Survive in the R&D Sector: Implications for Innovation and
Growthh
Economics Letters
By
allowing for investment activities by research and development (R&D) firms
to prevent product obsolescence, we show that if legal patent protection is too
strong, a higher R&D subsidy rate delivers insufficient investments for
survival in the R&D sector, depressing innovation and growth in the long
run.
Yin-Wong
Cheung (City University of Hong Kong) and Eiji Fujii (Kwansei Gakuin University)
gExchange Rate Misalignment Estimates - Sources of
Differencesh
International Journal of
Finance and Economics
We study the differences in currency
misalignment estimates obtained from datasets derived from two different
International Comparison Program (ICP) surveys. A decomposition exercise
reveals that year 2005 misalignment estimates are substantially affected by the
ICP price revision. Further, we find that differences in misalignment estimates
are systematically affected by a countryfs participation status in the ICP
survey and its data quality - a finding that casts doubt on the economic and
policy relevance of these misalignment estimates. The findings are robust to
the use of alternative datasets and specifications. The patterns of changes in
estimated degrees of misalignment across individual countries, as exemplified
by the BRIC economies, are highly variable.
March
2013
Tetsuro Mizoguchi (Reitaku University) and Nguyen Van Quyen (University
of Ottawa)
gAMAKUDARI:
THE POST-RETIREMENT EMPLOYMENT OF ELITE BUREAUCRATS IN JAPANh
Journal
of Public Economic Theory 14 (5), 2012, pp. 813–847.
This paper
analyzes the amakudari practice in
Japan. Amakudari refers to a process in which
government agencies contact the private firms that they regulate, asking them
to provide employment for their retiring elite bureaucrats. Upon employment at
the private firms, bureaucrats may collude with their former colleagues in the
ministries they worked for to secure lucrative government contracts, avoid
regulatory inspections, or obtain preferential treatment for their new
employers. This paper provides an explicit formalization of the implicit
collusion between the regulator and the regulated.
Kazuhiro
Takauchi (Onomichi City
University)
gRules of Origin and Strategic Choice of Complianceh
Journal of Industry, Competition and
Trade
This
paper examines how an input supplier's monopoly power affects exporters' choice
between compliance and noncompliance with rules of origin (ROO) in a free trade
area (FTA). When the regional input supplier has monopoly power, the number of
compliers largely affects the input price. This is because to meet ROO,
exporters must use a certain ratio of the input originated within the area. In
such a case, each exporter has an incentive to choose noncompliance with ROO if
the rival exporter complies. Because this incentive yields strategic
substitution between symmetric exporters, the coexistence of the complier and
the non-complier appears in equilibrium. Our model consists of three final-good
producers (one in an importing country and two in an exporting country) and one
input supplier, which is in the importing country and has monopoly power. We
show that within the range of parameter values for which some exporters comply
with ROO, the content rate affects the output of the final-good producer in the
importing country and the country's welfare in a U-shaped fashion. The content
rate levels that allow the coexistence of the complier and the non-complier
minimize welfare.
February
2013
Yushi Yoshida (Shiga University)
gIntra-Industry Trade, Fragmentation and Export Margins: An Empirical
Examination of Sub-regional International Tradeh
North American Journal of Economics and
Finance Vol.24 (2013) 125-138
This study
contributes to the existing empirical investigation of international trade by
providing new evidence of intra-industry trade using sub-regions within a
nation. We calculate the Grubel-Lloyd intra-industry
trade index for 41 Japanese regions with Korea during the period from 1988 to
2006. In sub-regional intra-industry trade regression models, we introduce
extensive and intensive margins of prefecture exports as new explanatory
variables. We find that a rise in sub-regional intra-industry trade is driven
by the introduction of a new variety of exports, while intra-industry trade is
discouraged by an increase in the trade value of products that are already
exported.
AutAsuka Oura (Osaka
University) and Tadashi Morita (Osaka Gakuin
University)
gNeutrality of an increase in the price of natural resources to the level of
technologyh
Economic Modelling
In
this paper, to investigate how an increase in the price of natural resources
affects the level of technology, we develop an endogenous variety expansion
model of a small open economy based on that of Grossman and Helpman
(1991, Ch. 3). We conclude that an increase in the price of natural resources
has a neutral effect on the level of technology in the long run.
Takashi
Kamihigashi (Kobe University) and John Stachurski (Australian National University)
gStochastic Stability in Monotone Economiesh
Theoretical Economics
This
paper extends a family of well-known stability theorems for monotone economies
to a significantly larger class of models. We provide a set of general
conditions for existence, uniqueness and stability of stationary distributions
when monotonicity holds. The conditions in our main result are both necessary
and sufficient for global stability of monotone economies that satisfy a weak
mixing condition introduced in the paper. Through our analysis we develop new
insights into the nature and causes of stability and instability.
January
2013
Been-Lon Chen,
Yu-Shan Hsu and Kazuo Mino
gCan Consumption Habit Spillovers be a Source of Equilibrium Indeterminacy?h
Journal of Economics
This paper
investigates whether the external consumption habit can be a source of
indeterminacy in a one-sector growth model when the labor supply is elastic.
When there is a proper habit effect with a positive intertemporal
elasticity of substitution, we find that the model exhibits indeterminacy if
the coefficient of the habit formation is sufficiently large that allows for a
substantial impact of current consumption on the habit. Indeterminacy arises
even though the elasticity of the Frisch labor supply is positive and the
elasticity of the labor demand in negative. In a calibrated version, we find
that indeterminacy is empirically plausible when the habit effect is negative
that features the gcatching up with the Jonesesh effect. Under given gcatching
up with the Jonesesh effects, the external consumption habit can be a source of
indeterminacy even if more than a half of the external consumption habit comes
from past average consumption.
Taketo Kawagishi and Kazuo Mino
gTime Preference and Long-Run Growth: the Role of Patience Capitalh
Economics Bulletin
This paper studies the relation between long-term economic growth and time
preference of households in the context of a simple model of endogenous growth.
We assume that the rate of time preference depends on the level of households'
patience (stock of patience capital). It is assumed that the patience capital
is accumulated by households' future-oriented investment and decumulated by consumption activities. The paper focuses on
how the level of patience capital is determined in the balanced-growth
equilibrium.
Yunfang Hu and Kazuo Mino
gTrade Structure and Belief-Driven Fluctuations in a Global Economyh
Journal of International Economics
This paper
constructs a dynamic two-country model with country-specific production externalities
and inspects the presence of equilibrium indeterminacy under alternative trade
structures. It is shown that the presence of belief-driven economic
fluctuations caused by equilibrium indeterminacy is closely related to the
specified trade structure. If investment goods are not internationally traded
and international lending and borrowing are allowed, then indeterminacy arises
in a wider set of parameter space than in the corresponding closed economy. By
contrast, either if both consumption and investment goods are traded in the
absence of international lending and borrowing or if only investment goods are
traded with financial transactions, then the indeterminacy conditions are the
same as those for the closed economy counterpart.