Take-home Final Examination

Japanese Economy in Transition

2016/07/05

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 Tuesday, July 19. No late submission will be accepted

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

A. Revitalizing Regional Economy

1. Why does the 18-years-old population have two peaks after the WWI?

2. What is definition of the large urban area by the Ministry of Internal Affairs?

3. Rank the 5 large urban areas in Japan by population.

4. Why is population aging more serious in the Tokyo metropolitan area than in the rural areas?

5. In comparison of prefectural income per population, Shizuoka and Toyama are highly ranked. Explain why they are so.

6. Why has the gap in labor productivity across prefectures decreased in the postwar Japanese economy?

B. Urban-Regional Redistribution and the Heisei Mergers of Local Municipals

7. Explain the Local Allocation Tax (LAT) grants. How is the transfer size determined?

8. Compare the tax revenues and government subsidies across prefectures.

9. What is the moral hazard problem of the LAT?

10. Under the Heisei Municipal Merger framework, many local municipals merged with each other in 2000s. What are the merits and demerits of the municipal mergers?

11. Some municipals remain independent. Why?

12. Tell me the tragedy of the Yubari City.

13. What are the merits of the prefectural mergers?

14. What is the “Osaka Metropolitan” plan?

15. What are the 20 designated cities?

16. Describe the reason why getting out of the Euro zone is not always a solution for the European debt crises.

17. Why did not “market discipline” prevent Greece from falling into the debt crisis?

18. What is the implication of the European debt crisis on Japan?

C. Shinkansen

19. What are the major differences between the 3 Honshu JR companies and the 3 island JR companies?

20. How are the deficits of the 3 island JR companies financed by the government?

21. What is the main difference in the way to finance the shinkansen construction between the past and now?

22. What is the latest strategy of the JR Kyushu Corporation to raise revenues?

23. What is the 1st reason why local people oppose to the construction of a new shinkansen?

24. What is the 2nd reason why local people oppose to the construction of a new shinkansen?

25. Why is the JR Tokai Corporation willing to build the Linear Chuo Shinkansen, without any financial supports from the government?

D. Abenomics and Growth Strategy

26. What are the three arrows of the Abenomics?

27. Zero interest rate is consistent with deflation expectation. Explain it.

28. Why is the policy regime change initiated by the new BOJ president Kuroda so amazing?

29. Why is the shift from manufacturing to service industries in Japan not so promising?

30. Why are international companies not expected to bring growth and employment to our domestic economy?

31. High education and medical service are the high value-added sectors? What are their problems?

E. Abenomics and Its Consequences

32. “Japan’s labor productivity growth has been improved.” Explain.

33. “Regarding the labor market performance, the current boom of Japanese economy is comparable to the bubble economy of 1980s.” Explain.

34. “Employment shift might cause real wage stagnation.” Explain.

35. Why is the core-core CPI more important than the core CPI or the general CPI?

36. In terms of the core-core CPI, what is the major difference between the Kuroda Regime and Shirakawa Regime of the BOJ?

37. What is the “Ricardian Equivalence” in the economic theory of fiscal consolidation?

38. Explain the major difference in the household consumption for durable goods, nondurable goods, and service?

39. What is the other major reason for the durable goods consumption boom for 2009-2013, in addition to the rush-hour shopping before the consumption tax hike in April 2014?

40. Why do small banks suffer from the NIRP?

41. Why is the NIRP better than the QQE, according to Miles Kimball?

F. Regional Gap in Europe, US, and Japan.

42. What are the major complaints coming from the UK citizens who voted for leaving the EU?

43. Regional income gap is smaller in Japan than in the EU. Why?

44. UK’s nominal GDP per capita is much higher than that of Japan, while its real GDP per capita is comparable to Japan. Why?

45. What is the Dutch disease, a leading explanation of the currency overvaluation?

46. The nominal GDP of Greece is overvalued. Why?

47. “The EU is too big to be economically integrated, because there is too large price level gap.” Explain.

48. How did the creation of the Euro zone affect the immigrants to UK?

49. What is another potential reason for the quality decline in the UK public welfare provision, in addition to the increasing immigrants?

50. What is the reason why UK did not grant the full UK citizenship to all the people in Hong Kong when it was returned to China in 1997?

51. Tell me your opinion on the UK decision to leave the EU.

G. Miscellaneous: Read the following article and answer all the questions. Start the presses: reconsidering a money-financed fiscal stimulus

52. What is the “classical economy”?

53. What is the money financing?

54. What is the Taylor rule?

55. What is the zero inflation targeting (IT)?

56. What is the major benefit from the money-financed stimulus in the classical economy?

57. What is the New Keynesian economy?

58. What is the condition under which money-financed stimulus improves welfare in the Keynesian economy?

59. Does the condition addressed in the previous question hold in the Eurozone?

60. Does the condition addressed in the previous question hold in Japan?