Take-home Final Examination

Japanese Economy in Transition

2023/07/02

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 Friday July 21. 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. Urban-Regional Redistribution and the Heisei Mergers of Local Municipals

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

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

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

4. 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?

5. Some municipals remain independent. Why?

6. Tell me the tragedy of the Yubari City.

7. What are the merits of the prefectural mergers?

8. What is the “Osaka Metropolitan” plan?

9. What are the 20 designated cities?

B. Growth Strategy

10. What is the “China Risk”?

11. Why has the Japanese economy been so vulnerable to the Yen appreciation/depreciation? Discuss the implication of the trade share denominated in Yen in comparison to U$ and Euro.

12. Why does the long-run economic growth rate converge to the rate of technological innovation?

13. What is the labor productivity?

14. What does “creative destruction” mean?

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

16. Explain the reason why the growth rate decreases because of the industrial shift of employment.

17. What is the Baumol’s Cost Disease?

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

19. What is the Singularity?

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

21. What does the power balance shift in the Indo-Pacific region suggest for the future economic growth?

22. What is the main difference between the age group graduating in 1987-1998 and the age group graduating in 1999-2013?

C. 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

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

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

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

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

D. Read the slide and answer to the questions. Include the graph 3 with your interpretation.

E. (Special for an extra credit)