Journal of the Japanese and International Economies最新文献

We examine how a firm's political connection measured by the membership of its CEO in the People's Congress (PC) or Chinese People's Political Consultative Conference (CPPCC) influences its likelihood of receiving the innovation subsidies given by the state. We find that politically connected firms are more likely to receive innovation subsidies. The political connection measured in this way is found much more important than state ownership in explaining the allocation of innovation subsidies. We also investigate if the firms that receive innovation subsidies are more innovative, productive, or profitable. Our results show that the firms that receive innovation subsidies file and receive more patents, but that their patents are not necessarily of high quality. They do not have higher productivity or profitability, either. The results collectively suggest politically induced inefficiency in the allocation of innovation subsidies in China.

This study examines the impact of remote work on subjective well-being, such as subjective productivity, work engagement, and health condition, during the COVID-19 pandemic. It also identifies the characteristics of workers and jobs that contribute to the continuous implementation of remote work, using data from the “Japan Household Panel Survey (JHPS)” and “JHPS Special Survey for COVID-19 (Waves 1 and 2).” As for the characteristics of remote work, multinomial logit models indicate that remote work tends to be continuously conducted in workplaces where performance rather than hours worked is valued, flexible work arrangements are allowed, and better management practices are conducted. In addition, workers with better IT skills, those exposed to new technologies, and those engaged in abstract tasks are more likely to work remotely after the state of emergency. Regarding the impact of remote work, we conjecture that the exogenous shift to remote work due to the pandemic had a heterogeneous impact on workers. The first difference models, where unobservable time-invariant worker heterogeneity has been removed, indicate a positive impact on subjective well-being for those who continued to work remotely after the state of emergency was lifted in 2020. Those who only worked remotely as a stopgap measure during the first state of emergency experienced negative impacts of remote work.

We empirically examine the effects of economic policy uncertainty (EPU) of which measurement methodology Baker, Bloom & Davis (2016) propose on the investment and cash holding behaviors of Japanese firms. We also examine spillover effects of EPU of the United States on them. We find that Japanese firms invest less and accumulate more cash when domestic EPU increases. Impacts of subcategories of domestic EPU differs: the uncertainty of fiscal and exchange rate policies are the key drivers of the negative impacts on corporate investment although the predictive power for investment of economic policy uncertainty of exchange rate holds only in the short run. As for the international spillover, we find that economic policy uncertainty in the United States has negative spillover (contagion) effects on corporate investment in Japan. Our findings suggest that Japanese managers become more cautious in making investment decisions as a response not only to higher domestic EPU but also US EPU.

Discrimination against foreigners in rental housing markets has been recognized mainly in the U.S. and European countries. In Japan, the difficulties experienced by foreigners who move into rental housing have been reported only by media or government questionnaire surveys, and there is little quantitative evidence. We conduct a correspondence study to observe discrimination against foreigners in rental housing markets in Tokyo's 23 wards during December 2019 and February 2020. Our results show that those who use a Chinese or Korean name decrease their probability of receiving affirmative responses to rental applications by approximately 13% compared with those who use Japanese names. Additionally, we find that the COVID-19 crisis increased the discriminatory behavior of rental housing owners and realtors.

We adapt to the Japanese case a model of stochastic debt sustainability within a monetary policymaking framework. The model incorporates the effects of unconventional monetary policy and its potential unwinding on sovereign debt dynamics. A scenario tree represents stochastic and correlated macroeconomic and fiscal variables, and a coherent risk measure allows to draw probabilistic inferences on sustainability. We calibrate the model to the Quantitative and Qualitative Easing (QQE) that Bank of Japan launched in 2013. Using a retrospective analysis, we find a large favourable effect of the QQE on sovereign debt dynamics. Forward-looking simulations under different exit strategies show that the termination and unwinding of the QQE could raise debt sustainability concerns. A sharp tightening of global financial conditions could have a similar negative impact on debt dynamics, requiring a fiscal adjustment to keep debt sustainable.

This paper explores a causal link between aging of the labor force and the declining trend in the real interest rate in Japan. We develop a search and matching model that features heterogeneous workers with respect to their ages and firm-specific skills. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure induce significant low-frequency movements in per capita consumption growth and thus the real interest rate. The model suggests that aging of the labor force caused the real interest rate to decline by 1 percentage point between 1980 and 2010 in Japan.

The importance of English communication skills has increased with globalization, and governments in various countries have encouraged students to go abroad. However, the causal impact of studying abroad has rarely been investigated, particularly in non-European countries. This study adopted a fuzzy regression discontinuity design (RDD) for the flagship scholarship program of the Japanese government for youth studying abroad. We found that scholarships significantly increased the probability of studying abroad by 77–80 points. We measured English proficiency using a multiple-choice test we originally developed and found that studying abroad increased English proficiency by 33–38% (or 1.15–1.35 standard deviation). We also found that studying abroad significantly improved their international posture and perceived communication competence in a foreign language, which are the two traits found to be important determinants of future development in language ability in applied linguistics literature.

This study assesses two central bank announcements about monetary policy and the central bank’s assessment of the economic outlook. We examine whether these two components influence macroeconomic and financial variables under the effective lower bound (ELB) of short-term nominal interest rates in Japan. We identify two shocks: a surprise policy tightening that raises interest rates and reduces stock prices and the complementary positive central bank information shock that raises both. We find that the two shocks have different effects on the Japanese economy. In fact, a contractionary monetary policy shock decreases inflation rates, whereas a positive central bank information shock increases inflation rates. The evidence suggests that announcements conveying the central bank’s assessment of the economic outlook play a certain role in the transmission mechanism of monetary policy under the ELB. However, our study shows that the two series of shocks do not induce changes in output. This suggests that they have a limited impact on the economy.

Health and macroeconomic outcomes varied substantially across prefectures in Japan during the COVID-19 crisis. Using an estimated macro-epidemiological model as well as the idea of revealed preference, we compute the marginal rate of substitution (MRS) and the conditional trade-off curve between health and economic outcomes in each prefecture. We find that there is a large heterogeneity in the MRS as well as the location and shape of the conditional trade-off curve.

Creative accounting has been a considerable problem in the field of governance and has caused serious economic issues. However, how governments determine the scale of creative accounting is unknown in the existing literature.

We study whether a difference in the usage and the scale of creative accounting is determined by the intensity of the incentive to issue excessive debt. To study this, we focus on municipal mergers, a well-known setting wherein smaller merging municipalities have a stronger incentive to enjoy freeriding and issue debt since the debt burden will be shared and mainly owed by larger merging municipalities. This setting enables us to use the relative population size as a continuous treatment representing the strength of debt issuance incentives, whereas existing papers focused on binary treatments. Utilizing the data of Japanese municipal mergers, we find that governments with small relative populations, which have a strong debt issuance incentive, employed creative accounting more intensively than others. Moreover, we investigate how governments used the money obscured through creative accounting for the first time and find that it was not used to overcome financial difficulties nor increase politicians’ pecuniary gains but to increase resident welfare.