Search

The COVID-19 crisis battered the Japanese economy. The purpose of this paper is to investigate whether the pandemic has left scars. To this end, it employs out-of-sample forecasting models and detailed stock market data for 30 sectors and disaggregated current account data for the 3 years after the first case occurred. The findings indicate that stock prices in sectors such as tourism, education, and cosmetics remain far below forecasted values after three years. Office equipment and semiconductor stock prices initially fell more than predicted but have since recovered. Other sectors such as bicycle parts and home appliances gained at first but are now performing as expected. Sectors such as home delivery and electronic entertainment continue to outperform. The results also indicate that income flows from Japanese investments abroad are much larger than forecasted, keeping the Japanese current account in surplus even as imports of oil and commodities have created persistent trade deficits. Since the travails of hard-hit sectors such as tourism reflect their exposure to the COVID-19 pandemic rather than bad choices made by firms, policymakers should consider employing cost-effective ways to stimulate economic activity in these sectors. [ABSTRACT FROM AUTHOR]

How did the Japanese government defend its postwar capital controls against foreign criticism within the wider discourse surrounding the liberalization of cross-border capital f lows? This paper argues that it was relying on the so-called "balance of payments rationale," a rhetoric linking the annual in- and outf lows of foreign money to current and future states of the national economy, to justify its continued application of foreign capital import controls between 1950 and 1967. It traces how legal, diplomatic, and economic conditions enabled the balance of payments rationale to assume this role. As the control of capital imports was an important element of Japan's postwar industrial policy, maintaining it was deemed essential for the country's economic development. Thus, the initial conditions of the capital liberalization discourse coupled with the effective use of the balance of payments rationale enabled the Japanese government to retain this important industrial policy tool. [ABSTRACT FROM AUTHOR]

For a better understanding of the ongoing debates on the RMB, this paper investigates the effects of exchange rate shocks on output and the current account for China and Japan. We use structural vector auto-regression models and find that yen appreciation reduces current account surpluses while having no strong effect on output in Japan. RMB appreciation, on the other hand, has an insignificant effect on the current account, although it tends to reduce output in China. For China, dollar pricing with vertical trade integration seems responsible for the insignificant effect on the current account. [ABSTRACT FROM AUTHOR]

An original version of the paper was presented at the Twentieth Annual Rokko Conference (July 1982) in Kobe, Japan. The author is thankful to Bela Balassa, Carl Christ, Louis Maccini, Jürg Niehans, Daniel Nolle, Hugh Rose, Peter Sinclair, Kazuo Ueda, Steven Vaughan, and an anonymous referee for helpful conversations and comments on earlier drafts He is, of course, solely responsible for any errors and deficiencies that may remain in the paper. [ABSTRACT FROM AUTHOR]

This paper employs cointegration and error correction models to examine the dynamics of the yen-dollar real exchange rate and the US-Japan real trade balance. It uses quarterly data from 1973.I-1993.IV. The unit root tests reveal non-stationarity in both the variables. The ADF test fails to affirm any long-run association between the yen-dollar real exchange rate and the US-Japan real trade balance. Also, there is evidence of bidirectional short-run Granger causality between these two variables with mutual feedbacks. [ABSTRACT FROM AUTHOR]

We estimate the impact of the extensity of macroprudential policies on the correlation of the policy interest rates between the center economies (CEs, i.e., the U.S., Japan, and the Euro area), and the peripheral economies (PHs). We find a more extensive implementation of macroprudential policies would lead PHs to (re)gain monetary independence from the CEs when the CEs implement expansionary monetary policy; when PHs run current account deficit; when they hold lower levels of international reserves; when their financial markets are relatively closed; when they are experiencing an increase in net portfolio flows; and when they are experiencing credit expansion. [ABSTRACT FROM AUTHOR]

This paper tests the effectiveness of marginal reserve requirements employed by Japan in the 1970s to influence short-term capital flows. We thereby contribute to the ongoing debate on the use of capital controls-market-based ones in particular. While the case for using market-based controls relies on the mixed evidence from the experience of Chile with unremunerated reserve requirements, testing for their effectiveness is hampered by the endogeneity of such a measure, which is typically imposed or intensified when inflows surge. We address this problem in the Japanese context by applying the method of propensity score matching, and find that an increase in marginal reserve requirements modestly reduced short-term capital inflows through non-resident free-yen accounts. The impact was not statistically significant, however, implying that the price elasticity of short-term capital flows was likely small. We conclude that market-based controls must be nearly prohibitive, perhaps combined with administrative measures, to be effective in a meaningful way. [ABSTRACT FROM AUTHOR]

This paper reviews the functioning of the Economic and Monetary Union over the first 4 years of its existence. Monetary policy is viewed as having been of the ‘inflation‐targeting’ type, but with a tendency towards delay and conservatism in adjustment, which may also reflect over‐optimistic output growth forecasts. The resulting pressure on the Stability and Growth Pact (SGP) illustrates the weakness in the ‘consensus view’ of the harmonious interaction of monetary, fiscal, and supply‐side policies, which requires policy in all three areas to be ‘correct’. In discussing reform of the SGP, a looser but still constraining form of fiscal agreement is advocated. The supply‐side and balance‐of‐payments issues involved in inter‐country adjustment also interact importantly with the SGP and are identified as key areas of difficulty in a still ‘immature’ monetary union, with separate labour‐market structures. Here the mechanisms for coordination are more or less absent. [ABSTRACT FROM PUBLISHER]

The intertemporal models of current account determination demonstrate that in the analysis of the current account balance of a country, it is important to distinguish between transitory and permanent disturbances in income and relative prices. This paper attempts to decompose the observed data on income and real exchange rate into transitory and permanent components and then uses the decomposed series to test the empirical validity of the predictions of the intertemporal models. Evidence from the United States and Japan provide very limited support for the intertemporal models in terms of the effects of transitory and permanent changes in income on current account balance. For both US and Japan, the study finds that permanent changes in real exchange rate have significant effects on the current account balance. Statistical tests find no evidence of hysteresis in the trading relations of the two countries. [ABSTRACT FROM AUTHOR]

Abstract: In this paper, I use stock return data to test an intertemporal model of the current account. I find that the model performs well in three countries: the U.K., Canada, and Japan. Hall [Hall, R.E., 1978. Stochastic implication of the life cycle-permanent income hypothesis: theory and evidence. J. Polit. Econ. 86 (6), 971–987] points out that because stock price predicts the future state of the economy, it predicts consumption. Assuming that consumption depends on permanent income, my empirical finding indicates that a representative agent smoothes consumption based on stock market information. In other words, stock market returns yield information about permanent income. [Copyright &y& Elsevier]

The extent of international capital mobility is assessed in a time series context. The possibility that the current account balance of different OECD countries contains a unit root is explored. It is shown that if the ratio of the current account balance to GDP is found to be integrated of the order of one, the country is likely to be part of the world capital market. The results for the whole period 1950-1988 indicate that the current account balance of at least Germany, Japan and the United States contains a unit root. Considering the subperiods before and after 1972 it is shown that international capital mobility increased after the breakdown of the Bretton Woods System. This paper develops a new approach to testing whether a country is linked to the international capital market. We show that if a country's current account balance expressed as a ratio to GDP contains a unit root, then there is no long-run stable relationship between its saving and investment rates and the country is linked to the international capital market. [ABSTRACT FROM AUTHOR]

This article presents discussion on the cycles of economic growth in Japan. The present prolonged boom is not a unique phenomenon. At least two similar periods have occurred before 1941, in connection with the favorable phases of long swings or Kuznets cycles of approximately twenty years apiece. Each of the past longish periods of rapid investment and growth has led to subsequent retardation thought overcapacity and balance-of-payments difficulties. At the same time, Japan's growth record would have looked far worse without these periods. Alter an unbroken eighteen year record of erroneous pessimism in my economic forecasts about a Japan shorn of her Empire, two questions are raised. First, the Japanese economic miracle, far from contradicting modem economic growth theory, makes an excellent case in point. Second, the boom can, although it need not, continue indefinitely, with the accumulation of excess capacity in the private sector. Japan's guided economy, however, is becoming increasingly safe for excess capacity. When excess capacity develops, producers maintain or raise prices. When they do not reduce output, they do not increase it in line with capacity.

In this study, I formulate a present value model of the exchange rate with a risk premium and introduce exchange rate risk exposure as a factor of the persistently time-varying risk premium. The present value model incorporates expectations for the distant future, and therefore, indicates that spot exchange rate variations reflect changes in long-run future interest rate differential and exchange rate expectations, in addition to a risk premium for long-run risk exposure. I also conduct empirical analyses using mainly the USD/JPY rate and other exchange rates against the USD. The Japanese current account balance provides a better estimation of the change in USD/JPY rate market risk exposure as USD invoiced trades are prevalent in Japan. Then, I demonstrate the possibility that a persistently time-varying risk premium offsets the effect of the interest rate differential on exchange rate variations, which can be a solution to the uncovered interest rate parity puzzle. [ABSTRACT FROM AUTHOR]

Inspired by the classical triptych of field, capital, and habitus, Green formulates the sexual fields framework to account for the current unprecedented expansion of specialized erotic worlds. In this essay, I analyze fieldwork data to ethnographically map the contours of the sexual field of Taipei's gay Bears. After tracing the origins of the Taiwanese Bear through Japan and ultimately back to the US, I critically examine the interactions of the sexual fields framework's core components. I make two conclusions here. First, Bears accumulate sexual capital through their bodies and the clothes they wear and rely heavily on social media to attain and retain sexual status. Second, while the Bear originally celebrated somatic diversity, interpersonal competition increasingly homogenizes Taipei's Bears attire to reveal the limits of Bear sociability. Through this essay, I contribute to the growing body of sexual fields research. [ABSTRACT FROM AUTHOR]

In this study, we apply a two-block structural vector autoregressive (VAR) model proposed by Kilian and Park (2009) in order to investigate the dynamic effects of changes in oil price on the expenditure category consumer price index (CPI) in the United States and Japan. Our results confirm that each expenditure category price index responded very differently to the same structural shock, and that whether changes in oil price function as a positive stimulus or a negative shock for the individual expenditure category prices also depends on the kind of underlying shock that drives the changes in oil price. Finally, our results also reveal that the manner in which changes in oil price affect each expenditure category price differs between the United States and Japan and these detailed-level differences may lead to aggregate-level differences in the price response of both countries to changes in oil price. [ABSTRACT FROM PUBLISHER]

This article discusses why the interest rate on Japanese government bonds is so low in comparison with other industrialized countries with a better credit rating, after correcting for inflation differences. We find that the net savings surplus has kept the long-term interest rate low. Japanese interest rate movements are much better explained by the current account balance in comparison with other industrialized countries. For most industrialized countries the results are statistically insignificant. For a country integrated in international financial markets, the savings-investment balance should theoretically not have a significant impact on domestic long-term interest rate formation. Institutional factors have contributed to this higher level of significance for Japan in comparison with other countries. Monetary policy and institutionalized purchases of government bonds by semi-government agencies have kept demand for bonds high and the interest rate low. [ABSTRACT FROM AUTHOR]

Exploring the factors influencing the balancing item of balance of payments accounts has seldom been a subject of research in international economics. Following Brooks and Fausten (1998), and using Japan's data, this study has empirically examined the influences of economic openness on balancing item. The results of subset VAR (Vector Autoregression) approach, Granger causality test, impulse responses function, and variance decomposition have showed that, to a certain extent, economic openness does influence the behaviour of Japan's balancing item. [ABSTRACT FROM AUTHOR]

The biodiversity and carbon dioxide absorption function of forests have received attention due to global warming. However, most of the world's forests are general production forests. Since production forests are maintained by production activities, a decrease in production or abandonment of management leads to a decline in forest functions and increases the risk of disasters such as landslides. Against this background, the retention approach has been proposed as a way to convert general production forests into forests with enhanced environmental functions, but it has rarely been applied due to technical and cost barriers. This study focuses on cost barriers and examines the possibility of introducing a retention approach to converting production forests to environmental forests, using Japan as a case study. About 70% of Japan's land area is covered with forests, 40% of which are production forests. However, due to the sharp decline in demand for timber in recent years and price competition with imported timber, the selling price of timber has fallen below the cost of managing production forests, and the management of many production forests has been abandoned. The dilemma is that the retention approach applied to the wood production process cannot be applied to forests where production activities are stagnant. Therefore, we explored the possibility of recovering the necessary costs with carbon credits that are available in the Japanese market. We calculated the cumulative carbon stocks of carbon dioxide in production forests by age, using intensity, and estimated how many years after planting the combined costs of normal production forests management and the retention approach would balance out. Our calculations show that even if carbon credits were sold at the lowest market price, the balance of payments would be balanced about 30 years after planting, resulting in a net profit from the sale of the wood. [ABSTRACT FROM AUTHOR]