Japan and the World Economy最新文献

By combining the static and dynamic computable general equilibrium models, this paper explores the dynamic impact of future demographic changes on the Japanese economy with a particular focus on multisector production and overlapping generations. Several numerical results were obtained. First of all, the sectoral real GDPs of the aging-related sectors are expected to continue to increase due to the higher demand generated by the elderly, while the total real GDP is forecasted to start to decrease from year 2036 due to the shrinking population. Secondly, calculations show that nearly 60 million more workers will be needed in the private long-term care sector in year 2049 than in year 2018. Thirdly, if a 90 percent inflow of additionally needed labor force to the medical services sector were to be obstructed, the total real GDP would shrink by 0.064 percent. If the same inflow obstruction were to occur to the private long-term care sector, the total real GDP would shrink by 0.030 percent. Fourthly, while a negative impact of the inelastic labor mobility was seen in almost all simulations, the impact of an obstruction in the medical service sector was found to be positive for the pharmaceutical sector due to substitution effect. Finally, the inelastic labor mobility will not only reduce the Japanese economic performance but also welfare, the extent of which depends on the duration of labor immobility. Thus, it is crucial for future economic growth as well as welfare of aging Japan that the additionally needed labor inflow to all aging-related sectors occurs smoothly.

Fiscally constrained governments prefer imposing tariffs instead of providing subsidies, despite tariffs distorting markets more than subsidies. Japan’s price adjustment program is designed to support the domestic sugar industry by imposing a tariff on imports and by subsidizing domestic production using tariff revenues. This study compared the program and a subsidy scheme using benefit/cost ratios and the degree of trade distortion. The main findings and their policy implications are as follows: 1) because the benefit/cost ratio for the program is greater than one, the program would be beneficial for Japanese people, 2) the ratios and trade distortions for the two policies are similar, thus the program works well when fiscal spending is constrained, as it requires less government spending, 3) using tariffs instead of the other two policies results in a smaller benefit/cost ratio and greater market distortion, 4) people are uncertain about their preference for the program, making them more accepting of it.

This study aims to estimate the elasticity of taxable income (ETI) with regard to the net-of-tax rate, precisely in terms of potential for the margin arising from the behavioral response. We use panel data from top Japanese taxpayers in Tokyo during 1986–1989 and focus on the tax policy changes caused by the 1987–1989 comprehensive tax reform, which substantially reduced the top marginal tax rates. It is found that the ETI with regard to the net-of-tax rate is approximately 0.158–0.226, considerably lower than those for the United States and many European countries. One possible reason for the small ETI estimates is the absence of the behavioral response in terms of choice of deductions in this study.

There are large disparities in premium level among the Municipal National Health Insurance (NHI) programs in Japan. As municipalities have discretion when setting the NHI premiums, they may determine their premiums observing how large or small the premiums of their neighbors are. This study examined how such reference behavior affects the NHI premium level and to what extent it explains the premium disparities. The results revealed that there was positive reference behavior among neighboring insurers which explains 7.2% of the NHI premium disparity.

This study evaluates Japan's corporate tax reforms in the 2010 s by estimating the effective average tax rate (EATR) and effective marginal tax rate (EMTR), common methods for international comparisons, using data on Japanese firms. Japan lowered its statutory tax rate while it expanded the tax base. This study analyzes the differing effects of the tax rate reduction and depreciation method reform by conducting simulations to represent the effects of each reform on the EATR and EMTR. Japan's tax reform in the 2010 s reduced both EATR and EMTR by lowering tax rates. The reform of depreciation methods had little effect on EATR and raised EMTR, but had a limited effect on companies with eligible depreciable assets. The overall effect of the corporate income tax reform is that the effect of the tax rate reduction exceeded that of the depreciation method reforms, and thus the EMTR also declined.

We investigate, from the perspective of the auto industry, the impact of US steel and aluminum tariffs and the resumption of auto tariffs under the revised North American Free Trade Agreement, on trade in North America and foreign direct investment (FDI) from Japan. The results of our policy simulation analyses with a recursive dynamic computable general equilibrium model are as follows. Canada and Mexico, being alternative trade partners with the US and other countries, would benefit from US steel and aluminum tariffs. Due to the auto tariffs on intra-North America exports, Canada and Mexico would lose a large part of their windfall benefits from US steel and aluminum tariffs. Japan’s FDI in Canada and Mexico would fall sharply. As the de-integration of North American economies proceeded, Japan would increase its auto production and exports. The negative impact on Japan’s welfare, largely the result of US steel and aluminum tariffs, would be neutralized by the US abolition of tariffs on Japanese auto exports.

This study empirically explores value-added tax (VAT) pass-through using unique point-of-sales (POS) data at supermarkets and drugstores in Japan. The VAT increase in 2014 covers almost all goods and services, with the same increase rate of 3%. Conventional wisdom assumes that all goods and services experience a 3% price increase from full-shifting. I show that the price changes in the month the VAT was increased are diversified, that is, the tax incidences are not uniform. The model estimations indicate that market conditions, such as elasticity and market concentration, determine the extent of tax shifting in accordance with theoretical assumptions. The effectiveness of the imperfect market approach is demonstrated. The evidence from this study implies that distributional equity cannot be attained through rate differentiation.

Using a panel of Japanese regional data from 1960 to 2003, we estimated the production effect of public capital formed through three types of government projects: (1) projects directly implemented by the central government (central-government projects), (2) projects that are implemented by local governments but induced through subsidies by the central government (subsidized-local projects), and (3) projects that are implemented by local governments without central subsidies (unsubsidized-local projects). The results showed that the unsubsidized-local projects were the most productive among the three types. In addition, the subsidized-local projects were found to be the least productive, being less effective than the central projects. This may suggest the existence of inefficiency factors that central subsidization for local projects entails under the Japanese system of intergovernmental transfers.

In the last two decades, manufacturing industries in Korea have become more concentrated, and interconnectedness across industries and across country borders has risen via vertical relationships and trade linkages. Using the industry-level international input–output data, this paper investigates the propagation of economic shocks in such a highly concentrated and interconnected structure, focusing on the role of vertical and trade linkages. The results establish that, first, the role of vertical and trade linkages in propagating economic shocks originated from both domestic sources and external sources is important. Second, the productivity impacts of a few key sources of economic shocks are relatively sizable. These findings highlight that economic shocks in a few key industries and/or major trading partners that are transmitted through vertical and trade linkages can lead to large swings in the overall economy. This paper contributes to the understanding of the potential interactions between the industrial structure and economic growth/stability.