Journal of the Japanese and International Economies最新文献

Given that real-world infection-spread scenarios pose many uncertainties, and predictions and simulations may differ from reality, this study explores factors essential for more realistically describing an infection situation. It furnishes three approaches to the argument that human mobility can create an acceleration of the spread of COVID-19 infection and its cyclicality under the simultaneous relationship. First, the study presents a dynamic model comprising the infection–mobility trade-off and mobility demand, where an increase in human mobility can cause infection explosion and where, conversely, an increase in new infections can be made temporary by suppressing mobility. Second, using time-series data for Japan, it presents empirical evidence for a stochastic trend and cycle in new infection cases. Third, it employs macroeconometrics to ascertain the feasibility of our model’s predictions. Accordingly, from March 2020 to May 2021, the sources of COVID-19 infection spread in Japan varied significantly over time, and each change in the trend and cycle of new infection cases explained approximately half the respective variation.

This study examines the low–interest rate environment in Japan from mid-1990 to the end of 2020, using a dynamic Nelson–Siegel framework emphasizing the role of the decay factor. A regime-switching model estimates that the regime with low decay factor and bond yield volatility (“low” regime) has persisted since the early years of Bank of Japan's quantitative and qualitative monetary easing (QQE) policy. A shift away from the low regime can instantly increase the 10-year government bond yield by over 50 basis points by increasing the term premiums with little changes in the expected short rate.

Equity carve-outs and spin-offs generate listed subsidiaries that embrace conflicts of interests between controlling and minority shareholders. We find robust evidence that long-tenure managers tend to conduct these asset divestitures, especially when the divesting firm has a concentrated ownership structure. The result suggests that managers with the opportunity to extract private benefits establish entities that provide such opportunities. Meanwhile, large shareholders prevent managers from conducting these divestitures when they have sufficiently large cash flow rights. We find no evidence that firms launching listed subsidiaries achieve better financial outcomes than asset sell-off firms. Problematic entities in corporate governance further create such entities.

This paper considers the relationship between wealth, financial literacy and several other variables using data from Japan's first large-scale survey on financial literacy. Using an instrumental variables approach to account for possible endogeneity of financial literacy, we find that financial literacy has an economically large and positive impact on wealth accumulation. We also decompose financial literacy into 5 sub-categories and find that deposits literacy, risk literacy and debt literacy have significant impacts on wealth accumulation in Japan, whereas inflation literacy and insurance literacy do not. Several variables suggested by behavioral economics, such as over-confidence, self-control, myopia and risk-aversion are also significant determinants of wealth.

We develop new economic policy uncertainty (EPU) indices for Japan from January 1987 onwards, building on Baker et al. (2016). Each index reflects the frequency of newspaper articles that contain certain terms pertaining to the economy, policy matters, and uncertainty. Our overall EPU index co-varies positively with implied volatilities for Japanese equities, exchange rates, and interest rates and with a survey-based measure of political uncertainty. It rises around contested national elections and major leadership transitions in Japan, during the Asian financial crisis and in reaction to the Lehman Brothers failure, U.S. debt downgrade in 2011, Brexit referendum, the deferral of a consumption tax hike, and the onset of the COVID-19 pandemic. Our uncertainty indices for fiscal, monetary, trade, and exchange rate policy co-vary positively but also display distinct dynamics. For example, our trade policy uncertainty (TPU) index rocketed upwards when the U.S. withdrew from the Trans-Pacific Partnership. VAR models imply that upward EPU innovations foreshadow deteriorations in Japan's macroeconomic performance, as reflected by impulse response functions for investment, employment, and output. Our study adds to evidence that credible policy plans and strong policy frameworks can favorably influence macroeconomic performance by reducing policy uncertainty.

Japanese regional banks are now facing an existential crisis. Their traditional business model has been devastated by the hollowing out of regional economies, technological change, declining populations and the rapid aging of Japan's non-urban areas. These banks must either go out of business or make significant changes. Reorganizations are a potential change that might solve the problem. Reorganizations include mergers and forming bank holding companies. This research examines regional bank reorganizations over the period from 2008 to 2019. It analyzes the stock market's response to announcements of bank reorganizations. A positive response is defined as stock price appreciation. It is a measure of the value that an efficient financial market attributes to the reorganization. This research finds that some kinds of reorganizations create more value than others. Specifically, mergers between banks within prefectures create more value. Yet, within prefecture mergers have the disadvantage that they might concentrate the provision of banking services in the hands of a few providers, leading to poorer services and higher fees. These reorganizations may violate competition law. Nevertheless, within-prefecture mergers may be a better overall solution to the regional bank crisis.

The paper investigates the heterogeneous effect of a policy-induced decline in people’s mobility on the Japanese labor market outcome during the early COVID-19 period. Regressing individual-level labor market outcomes on prefecture-level mobility changes using policy stringency index as an instrument, our two-stage least squares estimator presents the following findings. First, the number of people absent from work increased for all groups of individuals, but the magnitude was greater for workers with non-regular employment status, low-educated people, females especially with children, and those aged 31 to 45 years. Second, while work hours decreased for most groups, the magnitude was especially greater for business owners without employees and those aged 31 to 45. Third, the negative effect on unemployment was statistically significant for older males who worked as regular workers in the previous year. The impact was particularly considerable for those aged 60 and 65, thus suggesting that they lost their re-employment opportunity due to COVID-19. Fourth, all these adverse effects were greater for people working in service and sales occupations. Fifth, a counterfactual experiment of more stringent policies indicates that while an average worker would lose JPY 3857 in weekly earnings by shortening their work hours, the weekly loss for those aged 31 to 45 years and working in service and sales occupations would be about JPY 13,842.

This study revisits the propagation of trade effects through inter-firm transactions with upstream domestic firms on five types of business indices. It uses Japanese buyer–seller relationship data constructed by applying more suitable criteria for sampling firms. The results show that upstream manufacturing firms lower the probability of closing by selling their products to downstream manufacturing firms which increase their exports or imports. Interestingly, few unfavorable outcomes of indirect trade shocks were observed. These findings suggest that the economic impact of firms’ international trade on upstream suppliers is more nuanced than just a substitute or complement between international and domestic trade.

The Elderly Employment Stabilization Law, revised in 2006, helped the government increase elderly employment. While there has been much debate on whether the reemployment of elderly workers has substituted for or increased the employment of young workers, little attention has been paid to the potential peer effects of the former group on the latter’s productivity and other outcomes in the workplace. There might be knowledge spillovers from elderly workers to peers (positive peer effects) or the presence of unmotivated elderly workers lowering the morale of their coworkers (negative peer effects). In this paper, we investigate such peer effects from exposure to elderly workers using the employee satisfaction survey of a Japanese firm. We show that, on average, elderly workers do not have significant peer effects on coworkers’ satisfaction. However, the effects are heterogeneous depending on the ability of elderly workers as measured by their wages, and the age and job levels of their peers. Namely, nonmanagerial workers, particularly those in their 50s, are more satisfied and coworkers in their 30s and 40s receive more training when they work with elderly workers. The positive effects are significant when the focal elderly workers come from other units rather than when they stay in the same units implying that the sharing of broad experience might mediate the effect. In contrast, the presence of elderly workers makes first-line managers feel that there is poor communication in the workplace.

In this study, we quantify the worldwide tariff pass-through, that is, the impact of tariff reductions on trade prices. Some estimations show that a one-percentage-point reduction in tariffs decreases trade prices by approximately 0.1% (Lerner paradox). To determine the mechanism underlying this result, we decompose trade prices into product quality and quality-adjusted trade prices. We find that a one-percentage-point reduction in tariff rates decreases product quality by approximately 1.6% and increases quality-adjusted trade prices by approximately 1.5% (Metzler-like paradox in terms of quality-adjusted price). Thus, we construct a theoretical model to demonstrate the mechanism behind these empirical results. We suggest that both a firm-delocation mechanism under variable markups and a quality-sorting mechanism are the driving forces behind these empirical findings. Finally, we examine the welfare effect of tariff changes by employing this theoretical model. Despite the large decrease in trade prices, trade liberalization worsens consumer welfare.