Tomoya Mori, Jens Wrona, 16 August 2019

The gravity equation has often been used to explain trade between regions or cities within countries. But it assumes that the distribution of industries is exogenous. This column explains how trade estimates are affected if we assume that large, centrally located cities attract more industries whose firms are more likely to export to other cities. Japanese data show exports from these cities are systematically underpredicted by aggregate gravity estimations, as the theory predicts.

Tomoya Mori, 11 August 2019

The growth of large cities is often attributed to their proximity to exogenous, first-nature advantages. This column uses data on 450 Japanese cities to show that in fact, the regularity of agglomeration holds as a natural consequence of endogenous agglomeration and dispersion forces at the global or local level, rather than exogenous factors.

Sayuri Shirai, 18 July 2019

Modern monetary theory (MMT) has recently gained prominence in light of doubts about the effectiveness of monetary policy in addressing economic shortfalls. This column assesses the implications of implementing the theory’s policy prescriptions, and the challenges it presents in the case of Japan – an economy that some have argued has already been subject to such policy. Japan’s labour shortages and low inflation mean modern monetary theory’s fiscal stimulus suggestions may be harder to implement than they initially seem.

Toshimori Otazawa, Yuki Ohira, Jos van Ommeren, 09 July 2019

Relationship-based distance has become as important a determinant of firm interactions as physical distance in recent years. This column presents evidence to support the claim that firms physically locate closer to others that proximate in their transaction networks, though this effect varies across industries and by age of firms.

Takatoshi Ito, Satoshi Koibuchi, Kiyotaka Sato, Junko Shimizu, 10 June 2019

Japan exports to neither advanced nor Asian countries in yen, as would be expected. Using questionnaire data, this column shows why Japanese exporters tend to choose destination currencies in their exports to advanced countries and why the US dollar, rather than the yen, is more often used in their exports to Asia. It also presents new evidence that the share of local currency has recently increased markedly, while that of the US dollar has declined, in Japanese exports to Asia. 

Selahattin İmrohoroğlu, Sagiri Kitao, Tomoaki Yamada, 07 June 2019

Japan leads the advanced economies in the speed and magnitude of demographic ageing and has the highest debt-to-output ratio. Rising social insurance expenditures are projected to far outpace revenues and to create a fiscal burden. This column presents sobering projections for Japanese government debt in the absence of reform, but argues that a combination of policies, including policies to encourage greater labour participation by women and to enhance productivity, could achieve sustainability.

Liu Yang, Bin Ni, 21 May 2019

Concerns have been raised that outward foreign direct investment may reduce domestic employment and lead to the ‘hollowing-out’ of the manufacturing industries at home. This column uses a unique dataset of Japanese firms’ overseas activities to show that going abroad does not necessarily lead to a reduction of domestic employment. Investment by Japanese firms into other Asian countries has a positive impact on domestic job creation and a negative impact on job destruction, whereas the impact of investment into European and North American countries is negative for both job creation and destruction in Japan.

Tadashi Ito, Yukiko Saito, 16 April 2019

Small and medium-sized firms can enjoy the benefits of trade liberalisation by exporting their goods or importing inputs through intermediaries. Using firm-level data from Japan, this column finds that firms in regional areas are smaller than those in metropolitan areas and are less likely to participate in indirect or direct trade. Direct and indirect exports and imports represent a large share of regional economies, and indirect exporters in regional areas are likely to become direct exporters. In addition, both newly started direct export/import firms and newly started indirect export/import firms tend to grow faster.

Nobuaki Hamaguchi, Keisuke Kondo, 11 April 2019

Computerisation and robotics have had a profound effect on labour markets. Using data from Japan, this column finds that female workers are more exposed to risks of computerisation than male workers, and that this tendency is more pronounced in larger cities. The results suggest that supporting additional human capital investment alone is not enough as a risk alleviation strategy against new technology. Policymakers need to address structural labour market issues, such as gender biases in career progression and participation in decision-making positions.

Jeffrey Frankel, 29 March 2019

The supposed deadline for a conclusion to China–US trade negotiations has been postponed until late April. This column argues that the structural reform aspect of the negotiations is reminiscent of US negotiations with Japan three decades ago, and that the Structural Impediments Initiative between the two countries could, in theory, serve as a useful model for the current US–China negotiations. The question is whether Presidents Trump and Xi have as firm a grasp on economic principles as their predecessors. 

Isamu Yamamoto, 14 March 2019

The adoption of new information technologies such as AI in more workplaces is influencing not just employment and wages, but worker well-being such as job satisfaction, stress, and health. Surveying approximately 10,000 workers in Japan, this column analyses the impact of new information technologies on the nature of tasks performed by workers, job satisfaction, and work-related stress. It finds that AI adoption contributes to both greater job satisfaction and increased stress, and considers approaches to maximise the positives of new technologies adoption while minimising its negative side effects.

Natasha Kalara, Lu Zhang, Karen van der Wiel, 09 March 2019

The Global Crisis has profoundly changed the financial landscape, including firm financing. This column examines the development of various channels of firm financing before and after the crisis among four groups of EU countries, the US, and Japan. While bank finance and, to some extent, equity finance are under pressure, alternative finance, although small, seems to be on the rise.

Yoshiyuki Arata, 13 February 2019

The complex networks formed through customer–supplier relationships between firms have the potential to propagate shocks across the economy. This column explores how bankruptcy is propagated through a network of approximately one million Japanese firms. Bankruptcy propagation is observed empirically, but only very infrequently and with very limited reach. This is because the increased connectivity between firms disperses bankruptcy shocks such that they immediately die out. 

Satoshi Shimizutani, 14 January 2019

Social security reforms in advanced economies may give people incentives to work past retirement age. The column estimates the financial incentives to work or retire at each age for elderly men and women in Japan. There is a correlation between series of social security reforms to reduce generosity and the recent recovery of employment rates for men aged 60-69 and for women aged 55-64.

David Bloom, Paige Kirby, JP Sevilla, Andrew Stawasz, 03 December 2018

Worldwide ageing trends are steering global demographics into uncharted territory, transforming populations and societies around the globe. Japan is leading the way in this growth wave as the world’s oldest population and is now grappling with the substantial socioeconomic burdens an ageing population places on society. This column discusses the coming challenges associated with population ageing alongside plausible solutions. While there is no magic bullet for these challenges, there is scope to devise a multi-pronged solutions portfolio of complementary initiatives that includes a number of measures to promote and protect elderly health.  

Banri Ito, 01 September 2018

With protectionism on the rise around the world, the question of why politicians often call for protectionist trade policies in their election campiagnsis becoming more important than ever. This column introduces empirical evidence from Japan to show that politicians from constituencies facing a substantial increase in imports, and therefore stronger electoral pressure, are more likely to advocate protectionist trade policies.

Antonio Fatás, 16 June 2018

Koji Ito, 03 June 2018

Support for ‘anti-globalist’ policies across the developed world suggests that many people are concerned about the impact of globalisation on employment and wages. This column examines the wage premium for exporting among firms in Japan, using linked employer-employee data to control for other factors that may affect wages. Exports and wages clearly are correlated in Japan’s manufacturing sector, especially for smaller-scale plants and firms. 

Keiichiro Kobayashi, 05 May 2018

Future generations cannot influence current policies, while today’s policymakers and voters tend to be focused on the present. Understanding how to reconcile this disconnect is important for resolving intergenerational issues such as sustainability and swelling government debt. This column introduces the interdisciplinary field of ‘future design’ and discusses insights from a recent workshop held at the Research Institute for Humanity and Nature in Japan. It also proposes several directions for future design research.



CEPR Policy Research