Take-home Final Examination

Japanese Economy in Transition

2026/07/01

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

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 Wednesday July 22. 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. Tourism

10. Describe the process that Japan’s tourism industry recovered from the damage caused by the Coronavirus Pandemic.

11. How does the current trend in the number of foreign visitors to Japan differ from the trend in the number of Japanese citizens going abroad? What makes this difference?

12. Does tourism drive economic growth of Japan? Discuss.

13. What is the InbounDon? What does it symbolize?

14. What is the major problem of the current increase in the number of visitors to Japan?

15. Why are there so many national holidays in Japan?

16. Explain why Japanese employees are reluctant to take holidays on their will?

17. What is the purpose of the government's policy of staggering the holidays to different periods in different regions?

C. Why do young people move across regions

18. Why do local governments municipalize regional private universities?

19. What are the unique characteristics of Tokyo and Kyoto prefectures that affect the actions by high school graduates?

20. What types of disadvantages do the high school graduates in rural area suffer in their decision after graduation?

21. What is the private return to invest in higher education?

22. What is the public return to invest in higher education?

23. What is Japan’s uniqueness in private and public returns to invest in higher education?

24. Why is the private return to invest in higher education in Japan not so high as in US and Europe?

25. Why is the private return for woman so low in Japan?

26. Should Japan increase government subsidies to higher education institutes? Why?

D. Foreign exchange rates and Monetary Policies

27. What does the gap between the market exchange rate and the PPP (purchasing power parity) imply?

28. Discuss the gap between the market exchange rate and the PPP for the US dollar and the Euro.

29. There is an argument that Japanese Yen is weaker than Turkish lira. Is it correct or wrong? Explain the reason that leads to your conclusion.

30. Summarize the latest trends of the real effective exchange rates of the four leading currencies; US dollar, Euro, Japanese Yen, and the Renminbi.

31. Discuss the latest trends of terms of trade of the four leading economies; Japan, US, China, and Russia.

32. Why has the real wage of Japan been stagnated under the globalization?

33. Discuss the gap between the labor productivity and the real wage of Japan. What is the major difference of Japan from other advanced economies like the US and Europe?

34. There is a popular story that labor force moves to the sector in which productivity grows faster. Is it true?

35. What is the major difference of the Bank of Japan from other leading central banks in the world in the reaction to the inflation since 2022?

36. Why is BOJ so reluctant to raise the policy interest rate, while Japan is suffering from the weak Yen?

37. There is a large gap between the gross and the net amounts of the government debts of Japan. Explain the reason.

E. Europe and the US: Read article A and article B written by Paul Krugman and answer the questions.

38. What is the major argument raised by Paul Krugman.

39. Why is Krugman criticized by the leading economists like Phillipe Aghion and others?

40. Chose your position to offend or defend Pual Krugman. Why do you choose that position?