Take-home Final Examination

Japanese Economy in Transition

2017/07/12

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).

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 Monday, July 24. 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?

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

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

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

B. Shinkansen

D.

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

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

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

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

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

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

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

C. Young People Move Across Prefectures

20. What are the two major timings for young people to change location?

21. What are the benefits to municipalize local private universities?

22. Why are the college/university admission rates of high-school graduates so high in urban areas and so low in rural areas?

23. What does the comparison of the comparison of population pyramids of Nagano prefecture and Miyagi prefecture?

24. Why are Japanese universities so different in the comparison of universities in the OECD countries?

25. What are the characteristics of Tokyo Metropolitan Prefecture in the trade and income accounts?

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

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

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

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

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

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

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

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

33. 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?

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

E. Abenomics and Japan’s Growth Strategy

35. What are the three “arrows” of the Abenomics?

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

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

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

39. What is the Baumol’s cost disease?

40. What is the Creative Destruction?

41. “The latest data on labor productivity growth in the US suggest that the Singularity is approaching.” True or False? Discuss it.

42. The latest trend shows that the labor share of the national income has been declining. Is this consistent or not with the Singularity hypothesis?

43. “Employment shifts from the low productivity sectors to the high productivity sectors.” True or False? Discuss it.

F. Abenomics and Its Cnsequences

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

45. According to the Governor Shirakawa of the BOJ, Japan’s labor productivity growth over-performs the USA and the EU. True or False? Discuss it.

46. How can we explain the recent decline in the real wage of Japan, by focusing the employment shift across industries?

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

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

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

50. 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?