Japan and the World Economy最新文献

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.

This study investigates the capitalization effect of intergovernmental fiscal transfers from central to local governments on land prices. Using a drop in the size number of fiscal transfers following fiscal reform in the early 2000 s, this study examines the extent to which unconditional fiscal transfers to municipalities in the Tokyo metropolitan area are attributed to land prices. The result shows that the decline in the transfer has decreased the land prices in the municipalities. Furthermore, reducing one unit in the per capita grant reduced the value of housing area per capita by one or more units, even if the real discount rate was assumed to be as low as 2%. Therefore, the fiscal transfer reform more negatively affects the benefits of residing in a municipality in the area than the reduction amount in the transfer.

This study examines how the effectiveness of fiscal policy depends on population aging. To this end, this study estimates the local fiscal multipliers in Japan. Results suggest that the estimated local fiscal multiplier on output is larger in non-aged areas than aged areas, and that the effects on the number of workers are not statistically significant in either area type. Additionally, the multipliers on private investment are only higher than one in non-aged prefectures. Results also indicate that the multiplier generated by an increase in government investment is larger than that in government consumption. These results indicate fewer slack resources in aged areas that can be mobilized in response to increased government spending.

The US trade relationship with Japan was characterised by periods of intense conflict over 1969−95. The paper identifies five such periods, beginning with two bitter conflicts in 1971 and ending with an equally difficult conflict over autos in 1994−95. It presents econometric evidence suggesting rising Japanese penetration of the American market and growth in the bilateral merchandise trade deficit with Japan were important causes of these crises. Over 1996–2016, US-Japan relations were handled in a much less confrontational manner, as import penetration declined. The difficulties Japan’s economy faced; heightened security concerns in Northeast Asia; a broader US shift away from unilateral measures; greater acceptance of the trade deficit; and perceptions that Japan was moving to open its economy were also important in lessening tensions in the bilateral relationship. Strong concerns with the US trade deficit re-emerged under the Trump Administration, but the two economies were, during this period, able to address trade differences without a major confrontation.

The status of the deductions in Japan’s income and resident tax systems is an important policy issue. To analyze this issue, it is essential to have an evidence-based understanding of the situation regarding the effect of deductions on the tax burden reduction and income redistribution. To this end, we use household microdata from the National Survey of Family Income and Expenditure during 1994–2014 to conduct a quantitative evaluation of the burden reduction and redistribution effects of deductions over a 20-year period. Initially, the higher the income group, the higher the burden reduction effect of the deductions (ratio of deductions to gross income). However, the advantageous treatment of the higher income group has been decreasing annually and, recently, the burden reduction effect has reached a proportional structure. Although the system changes in deductions have decreased the tax burden effect due to deductions, these changes have contributed to weakening the effect of increasing the Gini coefficient.

It is well known that intra-industry trade and cross-border production networks have promoted economic growth and regional integration in East Asia. However, regional supply and production chains may have been formed differently across industries, reflecting different degrees and a different scope of regional economic linkages at an industry level. This paper makes a threefold contribution. First, to assess industry-level differences, this study adopts the generalized purchasing power parity (G-PPP) model using industry-specific producer prices. Second, the momentum threshold autoregressive (M-TAR) model is employed to allow for possible nonlinearity arising from the dynamic nature of regional economic growth and development. Third, the Granger causality test is also conducted to assess whether regional economies have autonomously integrated. The empirical results reveal that economic integration has progressed more autonomously in the electrical industry, as well as in the transportation equipment industry, as China and the ASEAN countries have become the final destination markets for finished products in these two industries.