The present paper clarifies an importing country's choice of a partner for a free trade area (FTA) formation in imperfect competition. Before FTA formation, the importing country is unable to impose the higher tariff on the imports from the exporting country with the lower marginal cost for preventing the outflow of monopoly rent under the“most favored nation”constraint of the GATT. However by choosing to form a FTA with the exporting country with the greater marginal cost, the importing country can undertake tariff discrimination (though incomplete) to enhance its welfare. But it definitely reduces the world production efficiency.

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This paper analyzes the dynamic behavior and efficiency properties of a disaggregated two-country model with production. Trade occurs in consumption goods, investment goods and in equities issued by firms of both countries. However trade between the two countries is always balanced, so that no international lending and borrowing takes place and no international trade in equities is allowed. In the long run the economy may not converge to a stationary state but exhibits endogenous competitive business cycles. The efficiency properties of these cycles are closely related to those of the stationary equilibrium. Loosely speaking, weak efficiency of a cyclical equilibrium is more likely the more efficient (in a Pareto sense) the stationary equilibrium, the more volatile the intertemporal price ratio and the larger the period of the cycle is.

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The role of secrecy in the implementation of monetary policy has recently not only stimulated various arguments by economists, but also greatly increased their interest in the effectiveness of the secrecy. This study is associated with the effects of secrecy on the interest rate and how social welfare is influenced. My model may suggest the possibility that the disclosure of monetary policy can both improve social benefit and reduce the undue disturbance or overreaction of the market place if the agents are assumed to be rational in the competitive setting.

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A positive productivity shock contemporaneously overshoots the shadow prices of land and capital, being followed by stimulated investment and higher land price inflation due to the presence of land adjustment cost.
Sectoral differences in land property tax may generate bubbles under perfect foresight. It is, however, ‘super rational’ and completely consistent with agents' long-run optimization behavior. The bubbles do not emerge if the tax favors households and if the land reallocation cost is sufficiently small.
Therefore, differential land tax treatment, in combination with a productivity shock, seemed to play one of crucial roles for recent land price bubbles in Japan. The recent revision of house and land renting law will decrease the adjustment cost to contribute to stabilizing the land price.

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This paper investigates whether there has been risk sharing between a main bank and borrowing companies in Japan. Horiuchi, et al. (1988) claim that systematic relationships indicating the existence of risk-sharing between them cannot be generally observed. However, contracts conditional on operating profits as in Horiuchi, et al. (1988) may not be feasible because of the moral hazard problem. As Christopher (1982) suggests, indexed contracts are one way to circumvent the moral hazard Here, an optimal indexed contract involving risk sharing is derived, and is shown to be consistent with the behavior of companies in the Japanese chemical industry.

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