A version of the overlapping generations model is used to analyze consumer behavior and the properties of monetary equilibria if agents are faced with a nonlinear rate-of-return schedule on saving. Optimal individual decisions depend on economic parameters in a non-standard way. Unlike money stocks may be crowded out of the economy by the competitive mechanism. In a long run rational expectations equilibrium either real stock prices or the aggregate supply of stocks constitute a free parameter of the model. In the short run, if expectations are inelastic, no endogenous constraints on nominal stock prices exist while nominal goods and real stock prices are restricted to certain subsets of the positive real line.

View full abstract

This paper considers the relationship between the quality of product and the market structure, under the assumption that the demand price of the good is increasing in its quality. Then we investigate the welfare effects of three types of quality regulation based on the surplus analysis.

View full abstract

In this paper, we examine the effect of increasing competitiveness defined by the increase in the number of firms competing in a product market on the risk and incentive of managers of managerial firms. If the costs are perfectly correlated, Cournot competition will reduce the risk each firm must bear and enhance the level of effort of the risk-averse manager. Even in this case, however, free entry does not bring about socially optimal managerial effort. On the other hand, if the costs are stochastically independent, the increase in the number of firms can give managers additional risk and lower managerial incentive.

View full abstract

In this paper, I analyze the determinants of saving in Japan using national income accounts data for the 1955-87 period. My results suggest that the age structure of the population is the primary determinant of both trends over time in Japan's saving rate and the high level thereof relative to the other developed countries and that Japan's saving rate can be expected to decline sharply due to the rapid increase in the ratio of the aged population to the working-age population. The level and rate of growth of income, wealth, (in the case of private and national saving) the unemployment rate, and (in the case of household saving) inflation are also found to influence the level of saving in Japan, and Japanese households are found to see through the corporate veil to some extent but not through the government veil.

View full abstract

Using a battery of specification error tests, I find several regime shifts in the Japanese money demand since early 1960's to the present in both M₁ and M₂CD. I conclude that the real partial adjustment model a la Goldfeld with appropriate interest rate variable, to be solid in terms of sign conditions, significance of estimated coefficients and tests of misspecifications. Estimated M₂CD function displays a remarkably solid forecasting ability, and it tracks the rapid growth of Marshallian K₂ after 1986.

View full abstract

Using survey data in the Tokyo foreign exchange market we consider the two popular hypothesis that explain the drastic appreciation of the yen after the G5. One hypothesis is that the long-term expected rate is drastically changed and the other is that the coordinated monetary policy moves the expectations of market participants. Standard tests of rational expectations do not give the affirmative evidence on these hypothesis.

View full abstract