The following duopoly model of trade will be considered. There are two goods (0 and 1). Good 0 is produced by perfectly competitive firms and good 1 is produced with nonlinear cost functions by a domestic firm and a foreign firm, each following the Cournot behavior. The home country can consider an import tariff and/or an export subsidy as policy instru-ments. In this paper we shall consider the full optimum and some constrained optima where only one instrument is available and examine effects on national and world welfare of a change in the domestic import tariff or export subsidy.

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This paper shows, under recursive preferences, that if a cash-in-advance constraint is formulated along the Baumol-Tobin transactions theory of liquidity preferences by considering leisure-transaction time tradeoffs, the Stockman-Abel cash-in-advance model becomes equivalent to the Sidrauski type money-in-the-utility-function model in its implications on the superneutrality of money. If such tradeoffs are extended to include production hours, a new dichotomy emerges in the sense that the effect of money growth on steady state capital intensity depends on the extent to which the marginal productivity of capital and the rate of time preference are affected.

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Using the specific-factors model of a competitive small open economy, this paper shows how the standard welfare analysis of capital flows with tariffs and quotas are modified in the presence of unemployment. Employment of labor is endogenously determined and our analysis establishes a departure from the traditional results with full employment. We show several policy implications. Free trade does not necessarily lead to a welfare gain for the country and the optimal policy intervention is considered. This paper derives the conditions under which a capital inflow will help or harm a country in the cases of tariffs and quotas.

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This paper will propose a complementary test for the hypothesis of the term structure with risk premia and make an empirical study on the Japanese Gensaki (bond repurchase) market using daily data. This complementary test employs an idea of reasonableness of risk premia. We adopt the probability that the return from an uncertain bond is greater than the return from a sure bond as a measure of the reasonableness of risk premia The important feature of this reasonableness measure is that it does not depend upon the specification of individuals' preferences. The calculated measure shows that the hypothesis of term structure with risk premia in the Gensaki market must be doubted.

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This paper presents hedonic analyses of residential land prices and rents in Kanagawa Prefecture, a typical bedtown prefecture of Tokyo, during the bubble period 1986-1988. Land characteristics explain land prices well in the bubble, but their relative imputed prices changed significantly over time. Access to Tokyo City, especially to Shinjuku Station, increased its importance in explaining land prices. Also the imputed prices of other characteristics are studied in detail. Rents are studied hedonically in a similar way. The relative imputed prices of characteristics were stable over time for rent. The estimated correlation coefficient between land price and rent increased over time. Thus it appears that the land price formation approached the rent formation hedonically in the bubble.

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