Japan and the World Economy最新文献

In response to a crisis, while retrenchments are considered to be an important part of a firm’s long-term recovery, research has indicated that downsizing strategies, reducing employment and shrinking the R&D budget, may lead to an erosion of a firm’s valuable core competence. Drawing from the literature of organizational turnaround strategies, this study advances the downsizing research by explaining how downsizing strategies affect a firm’s long-term performance. Using a uniquely compiled dataset of 2559 Taiwanese manufacturing firms, our research shows that increasing labor employment during a financial crisis can significantly improve a firm’s long-term total factor productivity and sales. In other words, employment downsizing may not be the best solution when encountering an economic downturn.

The effect of cross-border diversification on bank performance is part of the broader debate on how multinational banking and financial integration affect the global financial economy. Previous studies that examined this relationship present mixed results - namely that cross-border diversification improves bank performance but also increases bank risks that could lead to systemic failure. Even so, this line of debate has not been examined in the case of Japanese banks conducting international operations. The present study questions whether cross-border diversification improves the performance of Japanese banks and to what extent each cross-border expansion activity affects bank performance. The latter was largely ignored in previous studies. Our results show that cross-border diversification improves cost efficiency but decreases/harms the profit efficiency of the banks analyzed. In addition, we find that the expansion of foreign assets and foreign branch operations present funding risks and operational inefficiency. We offer two important recommendations. First, as a major player in international lending, the current expansion activities of Japanese banks require close monitoring and supervision to prevent systemic risk resulting from aggressive and risky overseas expansion activities. Second, the current expansion strategies of Japanese banks, especially the expansion of overseas assets and branch operations (retail banking), should be re-examined.

We incorporate sectoral job separation rates in a small open economy model to examine the Balassa-Samuelson (B-S) effect. Unequal separation rates give rise to compensating wage differentials. We simulate the model for Japan and replicate a feature of its economy that the nontradeables sector has higher wages and a higher separation rate compared to the tradeables sector. With productivity growth in the tradeables sector, labour moves from the tradeables sector to the nontradeables sector if tradeables and nontradeables are complements in consumption. The B-S effect is dampened. With a higher separation rate in the nontradeables sector, higher wages in the nontradeables sector amplifies this labour movement. Nevertheless, unemployment always falls due to a positive income effect. In contrast, the effect of productivity growth in the nontradeables sector is to lower the real exchange rate and raise unemployment.

In this paper, we examine the CPI (consumer price index) measurement errors under the first wave of the COVID-19 spread in Japan. To address this question, we construct high-frequency quality-adjusted price indices by employing daily scanner data from retail stores in Tokyo. We demonstrate the importance of using price data with the wide-ranging coverage of products and outlets by making explicit adjustments for temporary sales effects and retail service quality in examining the retail price dynamics under the COVID-19 pandemic as the voluntary lockdown constrained household purchasing behavior. Note that the sources of the CPI measurement errors under the COVID-19 pandemic differ significantly from those in the US, observed as wide-ranging and long-lasting stockouts. We show that downward bias, not upward bias generally advocated, was observed during the first wave of the COVID-19 spread in Japan. The magnitude of the downward bias is estimated at from $-0.6$ to $-0.3$ points on the CPI for food less perishables and eating out on the basis of cumulative changes from January 2020 to June. The contribution of the estimates to the overall CPI is $-0.3\text{\%}$ to $-0.15\text{\%}$ points on an annualized basis, considering that the estimation covers half-year and the weights are about a quarter of the overall CPI. The magnitude of measurement errors is deemed limited, and the overall trend of the CPI remains unchanged even after incorporating the estimated downward bias. It should be noted that this downward bias arises mainly from the “one-specification-for-one-item” policy by weakening the price representativeness in the Japanese CPI.

We examine how the COVID-19 contagion influences consumer expenditure patterns. We show that the consumption expenditure responses to the spread of the COVID-19 pandemic are significantly different between the older and younger generations. We find that older adults spend less than the younger generation by at least 5% during the pandemic. In fact, those aged above 60 significantly decrease their spending even on food and drink products by 13%. We also find that older adults forgo shopping in favor of the younger generation. These responses might be due to the fear of COVID-19 infection (Immordino et al., 2022).

The coronavirus disease (COVID-19) pandemic plunged many industries of the economy into contraction, particularly the travel, hotel accommodation, and eating/drinking industries. In Japan, some demand-inducing policies targeting such industries were implemented, known as the Go To Travel and Go To Eat campaigns. Using a unique individual-level survey, we investigate what factors make people respond to these campaign policies. We find that certain socioeconomics factors (e.g., gender, income, ICT skills) as well as noneconomic factors matter. In particular, risk attitudes, and personal traits (e.g., extraversion) crucially affect whether people traveled or dined out in response to these campaigns despite the spread of COVID-19.

This paper offers a variant of the Ricardian model able to structurally interpret the estimate of country specific variable—transportation infrastructure. Guided by this new theoretical framework, this paper shows that transportation infrastructure enhances international trade more than internal trade. Further quantitative analysis suggests 10% increase in transportation infrastructure induces 3.9% increase in real income and more than 95% of the gains concentrate on the infrastructure improving country. This paper also suggests that transportation infrastructure improvement increases real income mostly through internal trade cost reduction. All the above results suggest that better infrastructure leads to sizable gains providing additional empirical support to policies aiming to improve transportation infrastructure.

The standard firm heterogeneity model of FDI considers the case of whole ownership of foreign affiliates. However, there exist many partially-owned foreign affiliates. This paper builds a model based on Helpman et al. (2004) to allow various ownership structures and posits some testable hypotheses on the relationship between productivity and ownership shares/structures. The empirical part corroborates these hypotheses, showing that high productivity firms tend to have a higher ownership share in their affiliates, and lower productivity firms tend to opt for joint-ventures with wholesalers and/or local/3rd country partners.

Several types of FX derivatives involve the exchange of principal, making them a form of collateralised loan. But unlike other forms of collateralised borrowing, the payment obligations associated with such derivatives are not reported on the balance sheet: they are in a very real sense “missing debt”. This introduces gaps in the compilation of countries’ and sectors’ foreign currency positions, in particular their short-term US dollar obligations and receipts. When economic shocks occur, policies designed to restore the flow of dollar liquidity outside the United States (eg central bank swap lines) are blind to the scale of dollar liquidity needs in particular locations. This paper presents evidence that the missing dollar debt of banks and non-banks outside the United States is large, roughly double the dollar debt recorded on their balance sheets. It then reviews how well benchmark statistical collections – BIS international banking statistics (IBS), BIS OTC Derivatives (OTCD) statistics, International Investment Position (IIP) statistics, and the Coordinated Portfolio Investment Survey (CPIS)) – capture foreign currency positions, both on- and off-balance sheet, and where modifications to these statistics could help to close data gaps.

This study estimates the Gross Domestic Income (GDI) from taxation data by updating Fujiwara and Ogawa (2016, 2018). The National Account statistics in Japan derives GDI from GDP so that the national accounting identity always holds. However, from the experiences of the U.S. and Australia, where GDI is estimated independently from GDP, the identity does not hold in practice due to differences in data sources, inter alia. We find that the estimate of GDI exceeds GDP by about 20 trillion yen in 2019, which gives quite different readings of potential growth, labor share, household saving ratio, and saving-investment balance of both households and non-financial corporations in recent years. The present study likewise demonstrates how to combine the information of GDE and GDI to obtain true GDP.