35,906 Works

Fundamentals and stock returns in Japan

Louis K. C. Chan, Josef Lakonishock & Yasushi Hamao
This paper relates cross-sectional differences in returns on Japanese stocks to the underlying behavior of four fundamental variables: earnings yield, size, book to market ratio, and cash flow yield. Alternative statistical specifications and various estimation methods are applied to a comprehensive, high-quality data set that extends from 1971 to 1988. The sample includes both manufacturing and non-manufacturing firms, companies from both sections of the Tokyo Stock Exchange, and also delisted securities. Our findings reveal a...

The future role of Tokyo's financial market

Ariyoshi Okumura
The Japanese economy has already started a sound movement toward a positive restructuring by means of expanding domestic markets. Careful policy coordination is needed. If the United States fails to seriously address the issue of readjusting its twin deficits in order to put its economy on a healthy path, uneasiness may erode confidence in the dollar and also undermine the future role of the Tokyo financial markets, hindering their function as a stable supply base...

The relationship between defense spending and economic performance in Japan

Robert Dekle
This essay has three aims in evaluating Japan's military security burden. First, the composition of the defense budget of Japan will be reviewed, and an attempt will be made to make the definition of the Japanese defense budget consistent with the NATO definition of the defense budget. Second, the essay seeks to provide a rough measure for the level of defense expenditures "appropriate" to the level of benefits that Japan receives from international security and...

Problems of the U.S. trade structure

Mototada Kikawa
The trade deficit, which together with the budget deficit constitutes one side of America's "twin deficits," is still an enormous sum. Since Japan accounts for one third of the trade deficit, one has to pay close attention to it in the sense that the deficit trend forecasts the future of U.S.-Japan economic friction. The trade deficit's continuation became a headache for Washington's policy makers as well as something beyond the predictions of economists and academics....

Why are there so many retail stores in Japan?

David Flath
That Japan's distribution system is inefficient for having so many stores has become a cliché that appears in academic and journalistic writing on Japan as well as in U.S. government position papers. There are two economic arguments on which the inefficiency claim has been based. One is the argument that Japan has a dualistic economy in which the distribution sector, unlike some other sectors, is economically backwards and riddled with anachronistic customs that have a...

Management of the United States-Japan trade relationship and its implications for the Pacific Basin economies

Hugh T. Patrick
This short paper focuses on the three main dimensions of the U.S.-Japan trade relationship: macroeconomic, namely the overall immense respective trade and current account deficits and surpluses; microeconomic, namely sectoral issues of American business access to Japanese markets (and, less marred by bilateral frictions but of systemic importance, the nature of restrictions of Japanese access to U.S. markets); and systemic, namely the way in which the resolution of bilateral trade issues affect the rules of...

Japan's small-scale family enterprises

Hugh T. Patrick & Thomas Rohlen
Large firms are deemed to have powered Japan's growth through their real successes in generating output, raising productivity, absorbing and creating innovations through large-scale R&D, and creating and developing "the Japanese management system" of industrial relations, internal decisionmaking and close intragroup affiliations. Big business plays a highly visible, broad political and social role, financing political leaders and their factions, influencing national economic and other policy, serving as a role model, and preaching its business ideology....

Japan: Another economic recovery, new political terrain

Hugh T. Patrick
This paper reviews Japan's recent economic performance through the first half of 2005, as well as the economic implications of Koizumi's snap election. After a disappointing final 3 quarters in 2004, first quarter growth in 2005 was a strong 5.8 percent annual rate, followed by a reassuring second quarter at 3.3 percent annual rate. Slow gradual improvements across the economy can be expected to continue, but achieving sustained full employment economic growth depends on whether...

The difficulty of discerning what's too tight: Taylor rules and Japanese monetary policy

Adam Posen & Kenneth Kuttner
Observers have relied increasingly on simple reaction functions, such as the Taylor rule, to assess the conduct of monetary policy. Applying this approach to deflationary or near-zero inflation environments is problematic, however, and this paper examines two shortcomings of particular relevance to the Japanese case of the last decade. One is the unusually high degree of uncertainty associated with potential output in an environment of prolonged stagnation and deflation. Consequently, reaction function-based assessments of Japanese...

Characteristics of the Hedge Fund Industry in Japan

Ferenc A. Sanderson
In recent years Japan's hedge fund industry has been an increasingly popular destination for global investor allocations. Using a comprehensive database of returns and assets under management of Asian hedge funds we investigate the size flows, performance and other characteristics of Japan's hedge fund industry. We have four main findings. First, we find that the industry has grown at a phenomenal rate since the second half of 2003, although the compound annual growth rate of...

Professor Kiyoshi Kojima's Contributions to FDI Theory: Trade, Structural Transformation, Growth, and Integration in East Asia

Terutomo Ozawa
Professor Kojima of Hitotsubashi University is a leading Japanese economist in international economics. Two of his major ideas are reviewed: a theory of pro-trade FDI and an extended "flying-geese" theory of industrial development. Kojima's pro-trade FDI (which rests on the doctrine of comparative advantage) leads to a surprising discovery of David Ricardo's failure to see that the doctrine applies as equally to FDI flows as to trade flows. The recent phenomenon of production fragmentation is...

Defining Price Stability in Japan: A View from America

Christian Broda & David E. Weinstein
Japanese monetary and fiscal policy uses the consumer price index as a metric for price stability. Despite a major effort to improve the index, the Japanese methodology of calculating the CPI seems to have a large number of deficiencies. Little attention is paid in Japan to substitution biases and quality upgrading. This implies that important methodological differences have emerged between the U.S. and Japan since the U.S. started to correct for these biases in 1999....

Has Japan's innovative capacity declined?

Lee Branstetter & Yoshiaki Nakamura
This paper examines Japan's R&D performance since the early 1980s using several complementary modes of analysis. First, we examine evidence from aggregate economic statistics concerning changes in Japanese corporate R&D. Second, we analyze comprehensive data on R&D inputs and outputs for a panel of nearly 200 Japanese firms. Microeconometric analysis of this data set allows us to examine where any downturn in R&D activity is concentrated, what Japanese firms are themselves doing to rectify the...

Choices for Japanese fiscal policy

Kengo Inoue & David Harvey
This essay will attempt to make a critical assessment of the debate and to put Japanese fiscal policy into some sort of perspective. In doing so, we look at specific arguments by focusing on the following five headings which are examined in turn. (Note, however that point 5 is such a major issue in itself that it has been discussed in a separate paper written by the author3.) (1) Has the effectiveness of fiscal policy...

Paying for the FILP

Takero Doi & Takeo Hoshi
This paper examines the financial health of the Fiscal Investment and Loan Program (FILP) as of the end of March 2001. We study the financial conditions of FILP recipients, which include public corporations and local governments. We find many are de facto insolvent. Our estimates suggest as much as 75% of the FILP loans are bad. The expected losses are estimated to be about ¥75 trillion (over 15% of GDP). We also studied the effects...

Is foreign direct investment a channel of knowledge spillovers? Evidence from Japan's FDI in the U.S.

Lee Branstetter
Recent empirical work has examined the extent to which international trade fosters international "spillovers" of technological information. FDI is an alternate, potentially equally important channel for the mediation of such knowledge spillovers. I introduce a framework for measuring international knowledge spillovers at the firm level, and I use this framework to directly test the hypothesis that FDI is a channel of knowledge spillovers for Japanese multinationals undertaking direct investments in the United States. Using an...

Changes in Corporate Restructuring Processes in Japan, 1981-2007

Takeo Hoshi, Satoshi Koibuchi & Ulrike Schaede
We analyze a large database collected from newspaper articles that report on major episodes of corporate restructuring in Japan between 1981 and 2007. By linking this database with financial data on public firms, we identify changes in the likelihood that a distressed undergoes restructuring, as well as in some measures adopted during restructuring. We find that the way distressed Japanese firms are restructured has changed during this period. The likelihood that a large distressed firm...

The Japanese Asset Price Bubble: A 'Heterogeneous' Approach

Robert B. Barsky
Employing the neutral Kindleberger definition of a bubble as "an upward price movement over an extended range that then implodes", this paper explores the causes of the "Japanese Bubble" of 1985 to 1990 without precluding the possibility that the bubble was due to perceptions of fundamentals. Survey evidence indicates that at the peak of the bubble in the second half of 1989, the majority of Japanese institutional investors thought that the Nikkei was not overvalued...

Steel: Tokyo Steel, K.K.: Gaining and sustaining long-term advantage through information technology

William V. Rapp
This case for a Japanese mini-mill steel producer, together with other cases, supports an initial research hypothesis that leading software users in the US and Japan are very sophisticated in the ways they have integrated software into their management strategies. They use it to institutionalize organizational strengths and capture tacit knowledge on an iterative basis. In Japan this strategy has involved heavy reliance on customized and semi-customized software (Rapp 1995), but is changing towards a...

Retail banking: Sanwa Bank: Sustaining long-term advantage through information technology

William V. Rapp
This retail banking case together with other cases3 support an initial research hypothesis that leading software users in the US and Japan are very sophisticated in the ways they have integrated software into their management strategies and use it to institutionalize organizational strengths and capture tacit knowledge on an iterative basis. In Japan this strategy has involved heavy reliance on customized and semi-customized software (Rapp 1995) but is changing towards a more selective use of...

Trade and growth: Import led or export led? Evidence from Japan and Korea

David E. Weinstein & Robert Z. Lawrence
It is commonly argued that Japanese trade protection has enabled the nurturing and development internationally competitive firms. The results in our paper suggest that when it comes to TFP growth, this view of Japan is seriously erroneous. We find that lower tariffs and higher import. volumes would have been particularly beneficial for Japan during the period 1964 to 1973. Our results also lead us to question whether Japanese exports were a particularly important source of...

Pharmaceuticals: Takeda: Sustaining long-term advantage through information technology

Hiroshi Amari
This case study of Takeda was completed under a three year research grant from the Sloan Foundation. The project's purpose is to examine in a series of case studies how US and Japanese firms who are recognized leaders in using information technology to achieve long-term sustainable advantage have organized and managed this process. While each case is complete in itself, each is part of this larger study.

Worker discontent, voice, and EI programs in Japan: Evidence from the Japanese worker representation and participation survey

Hiroyuki Chuma, Takao Kato & Isao Ohashi
Using a unique new survey, the Japanese Worker Representation and Participation Survey (JWRPS), this paper documents that there is currently an alarming degree of worker discontent in Japan. Specifically, we find that: (i) nearly one in two Japanese workers usually do not look forward to going to work; (ii) almost one third of Japanese workers are dissatisfied with their current jobs and do not at all feel loyal to their employers or feel loyal only...

Postal banking in the United States and Japan: A comparative analysis

Patricia H. Kuwayama
This paper analyzes the experience of the United States postal savings system, and (in less detail) that of Japan, with a view to assessing the past and potential future role of postal savings in Japan. The immense size of Japan's postal savings system - accounting for one-third of household savings deposits and comprising the largest "bank" in the world - means that the question of their disposition is central to any discussion of the future...

Japan's labor unions

David Flath
The various labor laws enacted in Japan in the Occupation era, and still in effect today without substantial amendment, legitimized unions, both as bargaining units on behalf of the employees of large companies and as political organizations, but prohibited strikes by public employees, and did not lead to the establishment of valuable labor monopolies. The effective bargaining units in wage negotiations in Japan are mostly enterprise unions, whose respective members are employees of a given...

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