The Keynesian multiplier effect is reinterpreted and several issues that may have misled assessments of the effect of fiscal spending are discussed. It is shown that even in the textbook Keynesian framework some transfer policy 'reduces' aggregate demand and that publ works spending may...

The U.S. has been under pressure to abandon the unique first-to-invent feature of its patent law for awarding patents. The opposition to reform however argues that switch to a first-to-file rule, the international norm, will undermine innovation. We evaluate this argument in a dynamic stochastic...

External capital inflow on a massive scale into the emerging market economies is a very significant phenomenon of recent years. Making distinctions between direct investment, real and financial, and portfolio investment and incorporating crowding in or crowding out effects we derive some results...

We consider three objects of people's status preference, consumption, physical capital holding and money holding, and show that an economy grows or stagnates depending on which object people most seriously take as status. If the main object of status preference is consumption, a steady state...

As trade integration deepens in East Asia, it is expected that there will be closer links in business cycles among East Asian countries. Theoretically, however, increased trade can lead business cycles across trading partners to shift in either direction: while inter-industry trade resulting in...

This paper investigates prospects of a currency union in East Asia, focusing on trade and financial integration occurring in the region. We find, based on a dynamic factor model, regional common shocks have been quantitatively important for output variations in the Asian economies. We expect...

We confront two common objections to Harsanyi's impartial observer theorem; one to do with 'fairness', and the other to do with different individuals' having different attitudes toward risk. Both these objections can be accommodated if we drop the reduction axiom; in particular, if we...

This paper analyzes optimal nonlinear income and inheritance taxation by incorporating two types of models that were developed independently in the public finance literature: an infinite horizon representative agent model such as Judd (1995), Chamley (1986) and Lucas (1992), and asymmetric...

In the model there are two types of financial auditors with identical technology, one of which is endowed with a prior reputation for honesty. We characterize conditions under which there exists a "two-tier equilibrium" in which "reputable" auditors refuse bribes offered by clients for fear of...

In this paper, I consider the extent to which the stagnation of household consumption is responsible for the decade-long recession in Japan during the 1990s and early 2000s and the reasons for the stagnation of household consumption during this period and find that the stagnation of private...