Introduction to Japanese Economy

Final Examination February 2024

Ryoichi Imai

2024/01/25

Answer to all the questions. The answers must be simple and short. A simple copy of my lecture note will be downgraded. Follow the following instruction.

1. Convert your file to a PDF format (.pdf).

2. Name the file as< LAST-First-Course title> like <YAMADA-Taro-Economy>

3. Upload your pdf file to my JTW-economy folder at the file sharing system of the Kyushu University by Friday, February 9. No late submission will be accepted.

4. I will let you know the password in the last class.

5. Do not send your work by e-mail. Do not bring it to my office in a USB memory. Thank you for your cooperation.

The Lost Decade: True or False?

Is each of the following statements True or False? If it is false, replace the wrong word(s) with correct one(s). such as "Bush -> Obama".

1. Under the Bretton-Woods system, the United States had an obligation to stabilize the price of gold, while other countries were responsible to maintain the price of silver.

2. In 1971, the US president Carter announced that the US had suspended the convertibility of gold with US dollar.

3. The Smithonian agreement set the value of US dollar at 280 yen.

4. The US president Reagan was once a comedian before he became a politician.

5. The Twin deficits under the Reagan administration made the Yen appreciate against US dollar.

6. In 1985, the financial authorities of the 5 major countries met at NY and agreed that the US dollar should depreciate down to 240 yen.

7. The Ever-Appreciating Yen Syndrome hypothesis argues that the Japanese Yen is undervalued if the actual value of the US dollar is lower than its PPP level. 

8. Japan raised the general VAT rate to 5% in 1995. 

9. The 1997 currency crisis was harsh, especially for Thailand, Malaysia, China, and Korea.

10. Korea finally protected its currency from devaluation, thanks to the currency board system.

11. Brazil introduced dollarization to stabilize its price level, but failed eventually.

12. Prime Minister Koizumi was supported by his economic minister Ono Yoshiyasu.

13. Koizumi's political goal was to privatize the National Railroad.

14. The financial crisis was the most serious, when the economic minister Ono took a drastic policy to clean up the unperformed loans in 2003.

15. The Credit-Crunch hypothesis argues that the weak companies financially supported by the banks reduced the productivity of the Japanese economy in 1990s.

16. The BIS regulation on banks' equity ratio mandated the banks that are engaged in international business to maintain their equity ratio higher than 10%.

17. The Zombie hypothesis argues that Japanese firms were weakened by the financial difficulty caused by the bad loan problem.

18. The Koizumi cabinet privatized the FILP in order to destroy the Zombie firms and enable the strong recovery of the Japanese economy. 

19. The Lehman Brothers were called as the "dream team", because the leading traders and the Nobel-laureate scholars joined it.

20. The subprime crisis was caused by the soaring energy price in 2008.

Corporate Governance

21. Katsuhito Iwai says that the nature of corporation has "duality". Explain this.

22. Describe the contrast between the corporate nominalism and realism

23. How does the pyramidal system of shareholding work in the contemporary corporate governance? Discuss examples.

24. How does the cross-shareholding work in the contemporary corporate governance? Discuss examples.

25. What is the Horiemon-Livedoor case? What does it suggest for corporate governance in Japan?

The Nissan Case

26. Why did Nissan need Carlos Ghosn in 1999?

27. Why was Mr. Ghosn arrested by the Tokyo District Procecutor’s office in 2018?

28. What can you guess the current Nissan management want to do?

29. What can you guess the French government want to do?

30. Why is Nissan considered to be weak in the negotiation with Renault?

31. What is the “hostage justice” of Japan?

Read the article and answer to the questions.

32. What do you read from the 図表１?

33. How has the market rate of Japanese Yen been deviating from its PPP? What is its consequence?

34. How has the market rate of China’s Renminbi been deviating from its PPP? What is its consequence?

35. Why is overvaluation of the currency not recognized as a problem?

36. What does the 図表2 suggest?

37. Why is it difficult to conclude that the Yen depreciation was caused by the Abenomics?

38. What is the "political business cycles," observed in the American economy?

39. What is the common understanding shared by the major economists on the apparent cycle of economic data?

40. What is your interpretation of the apparent cycle of the deviation of the market exchange rate from the PPP?