Take-home Final Examination

Japanese Economy in Transition

2021/06/12

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). No other format will be accepted.

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 Sunday, July 18. 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. Shinkansen

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

16. 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?

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

C. Coronavirus Pandemic and Japan’s Economy

18. What impression do you derive from the comparison of “daily new confirmed COVID-19 cases per million people” of Japan, India, the US, and the UK?

19. Why did vaccination delay in Japan?

20. What are the two major reasons why Japan’s government are unable to effectively mobilize medical resources toward caring the infected patients?

21. What are the major industries most severely damaged by the coronavirus pandemic?

22. When was Japan’s economy most seriously damaged by the coronavirus pandemic?

23. Why is the stock market boom a puzzle?

24. What is the first channel through which government policy creates economic bubbles?

25. What is the second channel through which government policy creates economic bubbles?

26. Why did the loan-to-deposit ratio decrease while the government induced banks to lend more to the industries damaged by coronavirus?

27. M3 suddenly rose in 2020. Why?

28. Why do service industries look like the rakugo “Hanami-sake”?

29. What are the investors afraid of?

D. Growth Strategy

30. What is the definition of labor productivity?

31. What does “creative destruction” mean?

32. What is the inconvenient truth of Japan’s labor market?

33. What are the two major “high value-adding sectors” of the US?

34. What is the Baumol’s Cost Disease?

35. Baumol argues that even if medical care expenditures reach 60% of the GDP of the US, it is not a problem. Why?

36. What is the Singularity?

37. What is the fact that is consistent with the Singularity hypothesis?

38. What is the fact that contradicts the Singularity hypothesis?

39. Why does technological progress bring the Baumol Disease?

40. Why is economic development seeking for high value-added sectors not always supported by people?

41. What are the private benefits and costs of investment in higher education?

42. What are the public benefits and costs of investment in higher education?

43. Why is private return of higher education low while its public return is high in Japan?

44. Whey is private return of higher education lower for women than for men in Japan?

45. Why is running universities with public funds a redistribution from the economically weak to the strong?

46. Are the current university tuition fees too high or too low from the historical view point? Explain.

E. Read the following article and answer the following questions. How high-speed rail changes the spatial distribution of economic activity: Evidence from Japan’s Shinkansen

43. What is the “chicken and egg” problem of transport infrastructure?

44. What is the first question addressed by the first scenario of the two experiments? What city receives the largest benefit from the shinkansen construction?

45. What is the second question addressed by the second scenario of the two experiments? Does removing shinkansen enlarge Tokyo or Osaka?

46. What implication can you derive from this simulation study?

F. Read the following article and answer the following questions. Oliver in Wonderland.

50. What does Figure 1 suggest?

51. The policy suggested by Blanchard is to increase government expenditure if r<g. Figure 2 suggests that such a policy is inadequate. Why so?