Economic Analysis Series No.178
THE ECONOMIC ANALYSIS

November, 2006
(Articles)
"The Effect of Bank Failure on Client Firms -A Study on the Hanwa Bank's Failure-"
Yoshiko Murakami
"Risk Analysis of Pension Reserve Investment with Macro Economy Indexation under the 2004 Public Pension Reform"
Tomoki Kitamura
Kunio Nakashima
Masaharu Usuki
"How can IT Raise Productivity Linked with Workplace Re-organization and Human Capital in Japan ?"
Futoshi Kurokawa
Kazunori Minetaki
(Study)
"Local Government Bonds and Fiscal Discipline"
Takero Doi
Tomoko Hayashi
Nobuyuki Suzuki
(Reference note)
"The ESRI Short-Run Macroeconometric Model of the Japanese Economy (2005 version) -Basic Structure, Multipliers, and Economic Policy Analyses-"
Keiko Murata
Tatsuo Saito
Koichiro Iwamoto
Takeshi Tanabe

The full text is written in Japanese.

(Abstract)

(Articles)
"The Effect of Bank Failure on Client Firms -A Study on the Hanwa Bank's Failure-"

This paper examines the effect of Hanwa Bank's failure on unlisted client firms. I find that, in the short term after this failure, a decline in the profitability was significantly larger at firms who had Hanwa Bank as their main-bank. This result suggests that losing relationship with the main bank may increase cost of capital for unlisted firms at least temporarily through the loss of the information which had been gathered and accumulated within the main bank.

"Risk Analysis of Pension Reserve Investment with Macro Economy Indexation under the 2004 Public Pension Reform"

The 2004 public pension reform has increased the impact of pension reserve investment policies on benefit levels and financial soundness. Our analysis shows that the current policy can avert financial crisis until 2030. However, when the expected return on domestic bonds is reduced to market interest rate levels, a riskier asset allocation is required to satisfy actuarial assumption, implying a higher downside risk. In the future, the revision of investment policies will need to be done in coordination with pension plan design and recalculation process.

"How can IT Raise Productivity Linked with Workplace Re-organization and Human Capital in Japan?"

This paper examines the impact of Information and Communication Technology (ICT) on the productivity linked with workplace re-organization and human capital using large-scale cross-sectional data of Japanese firms
Our results suggest that the progress of ICT has positive effect on productivity and this effect become more effective by combining with firm's re-organization and human capital accumulation. However, our results also suggest that re-organizations have not made enough especially within the firm in Japan.

(Study)
"Local Government Bonds and Fiscal Discipline"

This paper compares the fiscal disciplines of local governments in various countries, and discusses the characteristics of local government bond systems in the United States, France, Canada, and Sweden studied through local survey. Some points are clarified from the international comparison. In many countries except Japan, local governments face discipline through market mechanism in the market of local government bond. Various actors such as investors and banks in the market support the fiscal discipline. Furthermore, some fiscal rules also play an important role for reduction of local government debt.

(Research note)
"The ESRI Short-Run Macroeconometric Model of the Japanese Economy (2005 version) -Basic Structure, Multipliers, and Economic Policy Analyses"

This paper describes the basic structure and multipliers of the 2005 revised version of the ESRI Short-Run Macroeconometric Model of the Japanese Economy, which was first released in 1998 (Hori et al. [1998]). The major revision in the 2005 model is that the chain-type deflator has been introduced, following the revision of Japan's System of National Accounts, to which the chain-linking method has been applied since late 2004.

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