Abstract: Can fiscal stimulus improve unemployment? If so, to what extent does an increase in government spending improve unemployment? These answers are still ambiguous since opposite empirical evidences are shown (for instance, Monacelli et al. 2010, and Bruckner and Pappa 2012). This paper examines the effect of government spending on unemployment in the Japanese economy, introducing unemployment in a fashion of Gali et al. (2012) into a medium-scale DSGE model with the effect of government consumption to stimulate private consumption and the effect of government investment to improve temporarily productivity of private firms through the accumulation of public capital. Our study shows that both government consumption and investment improve unemployment and the channel of reducing unemployment is mainly attributed to the traditional effect through an increase in aggregate demand. On the other hand, the effect of government consumption to induce private consumption is small. We also find the temporal effect of government investment to the productivity of private firms raises real wage but does not have much influence on unemployment variations. It should be noted that our results might come from modeling unemployment based on the market power of workers. Finally, our results are robust whether the estimation period includes or excludes zero interest rate periods.

Abstract: An economy is an interlinked web of production units. This paper examines both theoretically and empirically how offshoring reshapes firms' domestic production networks. We build a buyer-seller model that features supplier heterogeneity in efficiency and distance, as well as intermediate inputs that vary in the degree of specificity to the relationship with the buyer. Sourcing inputs from more regions requires additional up-front search costs, but reduces variable costs due to the use of the more efficient suppliers. The more productive buyers source inputs from the more distant locations, including foreign countries. Buyers tend to offshore generic inputs rather than relationship-specific inputs if for the latter, the increased transaction costs outweigh the benefits of searching due to higher variation in suppliers' productivity. A reduction in offshoring costs leads to buyers' displacement of the less efficient or distant domestic suppliers by foreign suppliers. The resulting reduction in variable costs will in general induce buyers to expand their scope of domestic outsourcing, offsetting some if not all of the displacement effect. Using unique and exhaustive data on the buyer-seller network in Japan, we find evidence supporting the main predictions of the model.

Abstract: This article studies and characterizes a family of reference-dependent choice procedures. The decision maker is assumed to compare alterna- tives with a reference alternative by a single criterion or multiple criteria. The choice set contains all alternatives passing the threshold (setting by the reference alternative) in terms of all criteria. Characterizations are provided for variants of such choice procedures.

Abstract: We estimate the causal effects of childcare availability on the maternal employment rate using prefecture panel data constructed from the Japanese quinquennial census 1990-2010. We find that childcare availability did not increase maternal employment, because the expansion of accredited childcare crowded out informal childcare provided by grandparents. However, as more and more families do not live with grandparents who used to take care of grandchildren, this crowding effect became weaker in the 2000s.

Abstract: This paper develops a model of schooling investment and labor search that generates a distribution of skills and frictional wage differentials as equilibrium objects. We use the model to shed light on how educational choices and labor market uncertainty interact in shaping wage inequality. We provide a novel decomposition of wage inequality into the variation driven by returns to education, unobservable productivity differences and matching frictions. Moreover, we are able to distinguish the role of education as a process that enhances worker's productivity from one that merely sorts workers by their productivity into the labor market. We calibrate our model to the U.S. data and quantify the contribution of each component to standard measures of between- and within-group inequality. Our findings indicate that the higher the educational attainment, the more important the role of workers' heterogeneity in shaping between-group wage differentials. In addition, the role of schooling as a process that enhances productivity is more important for college graduates than for college dropouts. With respect to within-group differentials, we find that labor market uncertainty is more important to account for this type of inequality, although its importance also decreases with educational attainment. However, in contrast with the between group differentials, the part of within-group dispersion explained by workers' heterogeneity is mostly driven by the positive sorting mechanism of the educational process.

Abstract: As energy conservation programs are adopted and distributed generation increases in scale, electric utilities’ sales growth has been slowing down in a number of U.S. states. Many states have adopted revenue decoupling (RD), where the utilities are allowed to adjust electric rates to maintain there revenues when their sales decrease. Depending on the nature of utility regulation and the electricity market, this has an ambiguous impacts on the utilities’ profitability. This study investigates the financial impacts of these policies on U.S. investor-owned utilities by exploiting heterogeneity in utility-specific regulatory regimes across states and over time. Our estimates indicate that electric utilities experienced increased prices and profitability after the introduction of RD.

Abstract: In the setting of Nippon Professional Baseball (NPB), this paper examines the effect of two different policies, creating more competitive labor markets and wage dispersion, on economic outcomes. While free agency, which ostensibly reduces monopsony power in the labor market, brings large increases in salary in most professional sports, we find that it does not do so in NPB. Moreover, different performance measures affect salary in MLB and NPB. We are able to examine the effect of wage dispersion on team success because rich baseball data allow us to hold team ability constant, which most previous studies have been unable to do. Thus, given ability, we show that wage dispersion in NPB has a positive impact both on the winning percentage and attendance of a team. Our results confirm previous results from NPB and contradict results from MLB, thus showing that that the institutional setting in which one implements a policy affects economic outcomes.

Abstract: We empirically investigate the differential impacts of two contractual formats, called Fixed-Price contracts (FP) and Unit-Price contracts (UP), on firm behavior and contract outcomes in procurement auctions. To deal with the procurer's selection of contract formats, we exploit exogenous variation in (i) procurer's backlog level, and (ii) state dependence in the use of the two contract formats. We estimate that FP would reduce the winning price bid by more than 20%, and reduce the likelihood of participating in an auction by 6% relative to UP for the projects with medium level of project risk. We embed FP and UP in a model of bidding for a contract, capturing the tradeoff between moral-hazard and the risk-sharing effect. We show that the model is semiparametrically identified. A simulation result suggests that switching from UP to an incentive contract would reduce the cost of procurement by X%.

Abstract: How far should an industry be allowed to consolidate, when both competition and innovation are strategic and forward-looking? We propose a stochastically alternating-move game of dynamic oligopoly with endogenous mergers, and extend Rust’'s (1987) method to estimate it using data from the hard disk drive industry, in which a dozen global players consolidated into only three in the last 20 years. We simulate welfare outcomes under alternative antitrust regimes which allow more or less mergers. The results highlight a dynamic welfare trade-off between ex-post pro-competitive effects of blocking mergers and ex-ante value-destruction side effects. We find the optimal policy is to stop mergers when five or less firms exist. This threshold may be relaxed in a declining industry but only slightly.

Abstract: We analyze equilibrium wage contracts in a competitive search model where a firm motivates workers to invest in a match-specific skill. If skill is not critical for production, the contract is first best. If critical, the contract coincides with an efficiency wage contract and cannot attain even second best. Unlike standard efficiency wage models, the wage plays a dual role, advertisement and motivation, which induces a novel source of inefficiency: the competition to attract workers forces a wage to be chosen that increases the ex ante utility of workers at the expense of ex post utility.

Abstract: In this paper, we investigate gains from strategy revisions in deterministic evolutionary dynamics. To clarify the gain from revision, we propose a framework to re-construct an evolutionary dynamic from optimal decision with stochastic (possibly restricted) available action set and switching cost. Many of major non-imitative dynamics can be constructed in this framework. We formally define net gains from revisions and obtain several general properties of the gain function, which leads to Nash stability of contractive games---generalization of concave potential games---and local asymptotic stability of a regular evolutionary stable state. The unifying framework allows us to apply the Nash stability to mixture of heterogeneous populations, whether heterogeneity is observable or unobservable or whether heterogeneity is in payoffs or in revision protocols. This extends the known positive results on evolutionary implementation of social optimum through Pigouvian pricing to the presence of heterogeneity and non-aggregate payoff perturbations. While the analysis here is confined to general strategic-form games, we finally discuss that the idea of reconstructing evolutionary dynamics from optimization with switching costs and focusing on net revision gains for stability is promising for further applications to more complex situations.

Abstract: This paper quantifies the welfare consequences of the medical arms race in the context of MRI adoption. We build and estimate a model of the vertical structure of the industry where MRI manufacturers sell high- and low-quality MRIs in the up stream market, whereas medical institutions provide medical services to patients in the downstream market. Simulation results suggest that the current free-entry policy in Japan leads to excess MRI adoption. Furthermore, regulating medical institutions' MRI adoption, taxing MRI purchases, or softening competition among MRI manufacturers would increase social welfare substantially by mitigating the business-stealing effect in the downstream market.

Abstract: This paper investigates how a listener's sensitivity, which represents the extent to which a listener incorporates others' advice, affect information transmission. We develop a multi-sender cheap talk model in which one decision maker (DM) consults two experts in making a decision. What is new in this paper is the main intuition regarding how the listener's sensitivity on the multiple experts' opinion affect information transmission, depending on the level of conflict between the experts. Somewhat counter-intuitively, high sensitivity may hurt the quality of communication with the experts. In fact, if there is only one expert, the DM can elicit more information as her sensitivity increases. If the DM has high sensitivity, the expert will be more willing to reveal information because such a DM will not persist with her opinions but would carefully consider and incorporate the expert's opinion. However, if there is more than one expert, the negative side of high sensitivity arises. Although a highly sensitive DM may incorporate more of one expert's opinion, she may also be easily influenced by another expert's opinion. If experts believe that their rivals hold opposite opinions, they may exaggerate their information to change the DM's mind. The degree of the listener's sensitivity may depend on her estimation of the importance of information possessed by the DM and the experts as well as the level of the DM's self-confidence in her skill to accurately interpret messages from the experts.

Abstract: The paper explores the implication of internal trade related costs. We extend the standard trade model with heterogenous firms to have a multiple port structure where exporting is subject to port specific local transportation costs and port specific fixed export costs as well as international bilateral trade costs. We derive a gravity equation with multiple ports and show that gravity distortion due to firm heterogeneity is conditional on port comparative advantage and resulting substitution of export across differentiated ports. Finally, we test the prediction of the model with Japanese custom data and detect a port substitution following the 2011 tsunami disaster.

Abstract: This paper considers buy price auctions with resale opportunities. As a winner has the right to sell an item to losers, transactions among bidders may take place after the auctions. In the analysis, we use a two-bidder framework where bidders' types are uniformly distributed. Under the assumption that before resale, bidders' valuations are perfectly revealed, it is shown that there exists an equilibrium at which bidders' all types submit the buy price. When the winner makes a take-it-or-leave-it offer to the loser, the initial seller can obtain a higher expected revenue than that of the case in which resale is not allowed.

Abstract: Lead is a metal known to affect almost every organ and system in the human body. However, lead still exists in ambient air in the U.S. and continues to endanger public health and welfare. In response, the Environment Protection Agency of the U.S. substantially strengthened the National Ambient Air Quality Standard (NAAQS) for lead at the end of 2008. The revised standard is 10 times tighter than the previous one set over 30 years ago by the U.S. In this paper, we investigate the effect of the new NAAQS for lead on (i) environmental quality in the U.S., (ii) trade patterns between the U.S. and Mexico and (iii) infant health in Mexico. We employ a unique combination of public/non-public datasets linking trade, environment and health outcomes both in the U.S. and Mexico that provide a rare level of detail and that were not previously employed in the related fields. Importantly, our data contain exact locations of polluting plants and residential locations at a fine disaggregated level that allow us to identify critical distance over which households are exposed to pollution emitted from sources. We use this differential impact by the distance from lead-emitting plants as the basis for a difference-in-differences estimation strategy. We find that the new lead regulation substantially improved the ambient air quality in the U.S.; the concentrations of lead in ambient air fell in areas close to lead-emitting industrial plants than areas slightly away from these plants in the U.S. Our evidence suggests that such improvements in the U.S. domestic environmental quality are accompanied by increased exports of lead contents to Mexico for recycle and production. We also find that exports from lead-emitting Mexican firms to the U.S. have also increased. Consequently, we find that the birth outcomes in Mexico deteriorated in proximity to battery recycling plants as compared with areas slightly away from them. Our findings are consistent with the pollution haven hypothesis suggesting that the stringent environmental policy in a developed country can induce offshoring? of pollution-intensive production. Our paper is the first paper to provide econometric evidence of adverse health consequences of such offshoring for a country with lax environmental standards.

Abstract: This paper proposes and estimates a structural model that can give answers to three questions: why do firms provide pension plans, why do firms with 401(K) plans make contributions to match employee contributions and why do workers with employer-provided pensions get paid more than workers without pensions. In the model presented in this paper firms offer pension plans (401(K) plans) in order to screen out workers with high discount rates. I estimate the model by using the data in the United States. The result of a counter-factual simulation suggests that if the government impose tax on earnings on pension asset the pension participation rate of younger people declines by 16%. Even though there is no significant change in participation rate of older worker, the pension balance at age aroung 55 declines by 31%.

Abstract: This study estimates the impact of conflicts in northern Mali on child health using two anthropometric variables -height-for-age and weight-for-height Z-scores- at different timings of exposure (in-utero and after-birth). The intensity of conflict exposure is measured by the total of deaths as a result of a conflict that broke out within a 100-km radius of each community. The estimation results show that the more severe the exposure of the children and their mothers, the greater the negative impact on child health. In conclusion, the timing of conflict exposure plays a critical role in child health outcome: the exposure to conflict in utero, not after birth, negatively impacts child health.

Abstract: This paper explores the quantitative impact on welfare of different parametric assumptions about bargaining power in a standard search and matching model of the labor market. The literature tends to focus on volatility in the labor market and often assumes that bargaining power is chosen in a way that attains the social optimum. This study computes the welfare loss if social efficiency is not attained and finds that, for a broad range of bargaining power, the welfare loss is less than 1% of the social optimum. This paper also investigates which aspects of the parameterization are important for welfare consequences.

Abstract: 日本銀行が「量的・質的金融緩和」を導入してから3 年余りが経過した。本稿では、この期間において、予想物価上昇率がどのように変化したのか、また、その背景にはどのような力が働いてきたのか、分析 を行った。その結果、予想物価上昇率は、上昇→横ばい→弱含みの3 つのフェーズに分けられ、「量的・質的金融緩和」が予想物価上昇率を押し上げた一方、原油価格の下落や新興国発の市場の不安定化など の外的要因が下押しに働いたことが示唆された。もともと現実の物価上昇率の動きに影響されやすい（「適合的な期待形成」の要素が強い）日本の予想物価上昇率は、2014 年夏以降、原油価格の下落など の外的要因によって物価上昇率が低下すると、その影響を強く受ける結果になったと考えられる。

Abstract: This paper provides an alternative approach to money non-neutrality. Specifically, it modifies the monopolistic competition model developed by Blanchard and Kiyotaki (1987), in such a manner that an increase in nominal money balances has a positive effect on real economic activity, without any assumption of nominal rigidity being imposed. This non-neutrality result arises from a pecuniary externality that people want to consume a wider variety of goods as the price level becomes higher. In the presence of that externality, an increase in nominal money balances raises the price level, which induces people to consume a wider variety of goods. This, in turn, activates some idle abilities to produce differentiated goods, increasing the aggregate output, thereby improving economy-wide resource allocation. In fact, monopolistic competition is not essential to this non-neutrality result, although the presence of monopoly power has a positive effect on resource allocation when the supply of nominal money is sufficiently small.

Abstract: We investigate the effect of incorporating zero lower bound (ZLB) in monetary policy rule and asymmetric adjustment costs (AAC) in firm’s price setting mechanism in a standard New Keynesian DSGE model on explaining the unique experience of Japanese economy over the last three decades. To improve the accuracy of evaluating the nonlinear feature of the model, the projection method is employed in solving the model. We estimate the model using the Bayesian method combined with a particle filter and show that the estimated model with both ZLB and AAC outperforms the benchmark model in term of explaining the data. The adjustment cost in reducing prices is estimated to be 24 to 32 percent higher than raising prices. The presence of this downward price rigidity is likely to play a role in preventing further deflation by mitigating the deflationary pressure from the reduction of productivity.

Abstract: In this paper, we study the effect of conventional interest rate policy, quantitative easing and the reserve accounts' interest rate on the money stock in an industrial-organization model of the banking industry with money creation.? Our main findings are as follows. First, under a plausible setting of the parameters, the model with money creation supports the liquidity puzzle, in which tight monetary policy increases the money stock.? Second, quantitative monetary easing has a similar effect.? Third, the negative interest rate policy on reserves has a negative effect on the money stock.

Abstract: 経済学では、1970年代のルーカス批判以降、近年では、ミクロ的基礎づけを持たないマクロ経済学は、主流派には受け入れらないものとなっている。 一方、物理学では、大野による「統計力学が熱力学を基礎づけるのではない。 熱力学との整合性こそが、統計力学を基礎づけるのである。」という主張等をきっかけとして、 1990年代以降、Lieb やYngvason、佐々、田崎、清水らによって、熱力学の公理論的な整備が進められた。 これらの整備の結果、熱力学、統計力学の専門家の間では、それまでの「統計力学が熱力学を基礎づけている」という見方ではなく、 「熱力学が統計力学を基礎づけている」という見方が正しいものとみなされるようになっている。 つまり、物理学では、マクロ（熱力学）がミクロ（統計力学）を基礎づけているという見方が主流になりつつあるといえる。 本発表では、このマクロがミクロを基礎づけているという物理学の見方を援用することで、ミクロ的基礎づけを重要視する経済学に新たな視点を導入することを試みる。