Economic Analysis Series No.176
THE ECONOMIC ANALYSIS

June, 2005
"Facilitation of Fund Supply and Small Business Failures"
Yasuko Takezawa
Katsumi Matsuura
Masahiro Hori
"A Trade-off Between Efficiency and Equity in Adopting Differential Rates to the Consumption Tax"
Tomohiro Murasawa
Michio Yuda
Yasushi Iwamoto
"Effect of Uncertain Fiscal Policy on Consumption: A Case in Japan"
Masao Tsuri
"Currency Devaluation and Price Expectation: Lessons from Okinawa in the beginning of the 1970s"
Satoshi Shimizutani
Tatsuhiro Yogi
"Why Has Japan's Fertility Rate Declined? An Empirical Literature Survey with an Emphasis on Policy Implications"
Yuske Date
Satoshi Shimizutani
"Survey: Did the TFP Growth Rate in Japan Decline in the 1990s?"
Tomohiko Inui
Hyeog Ug Kwon
Comment
"Have the Deflationary Expectations Decreased the Money Multiplier"
Shigeyuki Hattori
Reply
"Expected Inflation Rate as a Determinant of Money Multiplier"
Yasuyuki Iida
Yutaka Harada
Koichi Hamada
"Family Life and Family Policy in Sweden: Implications for JapanS"
Tomoko Hayashi
"The CAO Short-Run Macroeconometric Model of Japanese Economy (2004 version) -Basic Structure, Multipliers, and Economic Policy Analyses-"
Keiko Murata
Tatsuo Saito

The full text is written in Japanese.

(Abstract)

"Facilitation of Fund Supply and Small Business Failures"

This paper investigates the effectiveness of policies to facilitate fund supply for small and medium enterprises (SMEs) in late 1990s in Japan. We set up a panel on Japanese prefectures from FY1995 to FY2001 to estimate a system of equations of i) Lending to SMEs, ii) Credit Guarantee Outstanding, and iii) Business Failures. We found Japanese SMEs are too much indebted to pay back their borrowings from their earnings. Estimated coefficients suggest that, despite their social costs, fund supply facilitation policies did nothing but delaying the timing of business failures.

"A Trade-off Between Efficiency and Equity in Adopting Differential Rates to the Consumption Tax"

We conducted a simulation study in which the outcome of a tax reform plan was evaluated from the viewpoint of social welfare. We first compared two tax reform plans that generated an equivalent amount of revenue; one raised the consumption tax to a uniform 10 percent, and the other introduced differential rates. The latter plan achieved higher welfare when the social welfare function was utilitarian. However, when the tax increase grew, not using differential rates achieved higher welfare with a relatively small degree of inequality aversion.

"Effect of Uncertain Fiscal Policy on Consumption: A Case in Japan"

This paper investigates effects of fiscal uncertainty on private consumption. Discretionary fiscal policy has been adopted frequently especially in 1990s in Japan, but it has not always been consistent. Indices of fiscal uncertainty are estimated from variances of actual expenditures, consistency in economic policy, and feasibility of budgets. The extended precautionary savings model explains that fiscal uncertainty deters current consumption. Empirical analysis finds negative effects of fiscal uncertainty. Especially, variances of actual expenditure induce significant effects in case of Japan.

"Currency Devaluation and Price Expectation: Lessons from Okinawa in the beginning of the 1970s"

This paper focuses on an unusual experience in Okinawa history to evaluate the effect of devaluation on inflation expectations. Until the handover of Okinawa to the mainland of Japan in May 1972, Okinawa's legal currency was the U.S. dollar. During the period, the Nixon shock of August 1971 caused a dramatic devaluation of the dollar. Our estimates demonstrate that the devaluation increased price expectations by 5 to 7%.

"Why Has Japan's Fertility Rate Declined? An Empirical Literature Survey with an Emphasis on Policy Implications"

This paper surveys the literature on the decline in Japan's fertility rate, which is now the lowest in its modern era. We survey empirical studies to examine the relationship between birthrate and several factors: an increase in the opportunity costs of having children, the growing costs of child-rearing, the shortage of child care services, poor company support for child care leave, and direct public compensation for having children. We conclude that all policies that support female workers and child care are especially important.

"Survey: Did the TFP Growth Rate in Japan Decline in the 1990s?"

This paper surveys the methodologies adopted and the results produced in 13 studies on Japan's TFP growth in the 1990s at the macro- and industry-level. Most of these studies point out a slowdown in Japan's TFP growth rates during the 1990s, however, the degree of the slowdown is fairly small. Using the Japan Industrial Productivity Database, we estimate the mark-up ratios and the degree of returns to scale at the industry level, and then re-estimate TFP growth rates.

"Family Life and Family Policy in Sweden: Implications for Japan"

By conducting a survey of Swedish families and analyzing the data, this paper identifies factors that support the coexistence of high female labor participation and total fertility rate: child-care leave for more than one year, working part-time after leave, child-care service at lower cost and better child benefits. Due to leave, 25 percent of the female labor force age 25-34 are actually absent from the workplace. The survey also finds that more than 90 percent of Swedish legally married couples have experienced co-habitation for several years before their marriage.

"The CAO Short-Run Macroeconometric Model of Japanese Economy (2004 version) -Basic Structure, Multipliers, and Economic Policy Analyses-"

This paper describes the basic structure and multipliers of the revised version of the CAO Short-Run Macroeconometric Model of the Japanese Economy, which was firstly released in 1998 (Hori et al. [1998]).
The model is basically a demand-oriented, traditional Keynesian-type model with IS-LM-BP framework; however, it adopts recent developments in econometrics, such as co-integration, and error-correction to ensure a long-run equilibrium.

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