Tokyo Center for Economic Research

[News] Call for papers: Unconventional Policy and Emerging Economies

TCER (Tokyo Center of Economic Research) and Institute of Developing Economies (IDE-JETOR) plan to have a conference on “The Effects of Unconventional Monetary Policy on Emerging Economies”. As the theme shows, our main interest is to see what impacts recent unconventional monetary expansion in developed countries had on various emerging economies. We accept any paper that analyzes the related topics. The conference will be held at the University of Tokyo in March 2015. If you are interested in contributing a paper for the conference, send your first draft to by the end of November 2014.

A special issue of the Developing Economies (DE) on the conference theme will be published under the Guest Editorship. Authors whose papers are presented at the conference are supposed to submit their papers to the DE special issue. Papers submitted for this special issue will undergo the normal journal reviewing process.

DE is an academic journal published by WILEY-BLACKWELL and has ISI impact factor. Its details are available at

April 21, 2014
Shin-ichi Fukuda, Professor, The University of Tokyo, Japan
Etsuro Shioji, Professor, Hitotsubashi University, Japan

20. April 2014

The Latest TCER Working Papers

April 2014
The Kernel of a Patent Licensing Game

Shin Kishimoto and Naoki Watanabe

This paper considers general bargaining outcomes under coalition structures formed by an external patent holder and firms in oligopoly markets. The main propositions are as follows. For each coalition structure, the kernel is a singleton; thus, the number of licensees that maximizes the patent holder’s revenue can be determined. The upper and lower bounds of the kernel are specified for each coalition structure. We also provide sufficient conditions for the number of licensees that maximizes their total surplus to be optimal for the patent holder.
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April 2014
Zipf’s Law, Pareto’s Law, and the Evolution of Top Incomes in the U.S.

Shuhei Aoki and Makoto Nirei

This paper presents a tractable dynamic general equilibrium model of income and firm-size distributions. The size and value of firms result from idiosyncratic, firm-level productivity shocks. CEOs can invest in their own firms’ risky stocks or in risk-free assets, implying that the CEO’s asset and income also depend on firm-level productivity shocks. We analytically show that this model generates the Pareto distribution of top income earners and Zipf’s law of firms in the steady state. Using the model, we evaluate how changes in tax rates can account for the recent evolution of top incomes in the U.S. The model matches the decline in the Pareto exponent of income distribution and the trend of the top 1% income share in the U.S. in recent decades. In the model, the lower marginal income tax for CEOs strengthens their incentive to increase the share of their firms’ risky stocks in their own asset portfolios. This leads to both higher dispersion and concentration of income in the top income group.
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March 2014
Attribution Error in Economic Voting: Evidence From Trade Shocks

Masami Imai, Cameron Shelton and Rosa Hayes

This paper exploits the international transmission of business cycles to examine the prevalence of attribution error in economic voting in a large panel of countries from 1990-2009. We find that voters, on average, exhibit a strong tendency to oust incumbent governments during an economic downturn, regardless of whether the recession is home-grown or merely imported from trading partners. However, we find important heterogeneity in the extent of attribution error. A split sample analysis shows that countries with more experienced voters, more educated voters, and possibly more informed voters—all conditions which have been shown to mitigate other voter agency problems—do better in distinguishing imported from domestic growth.
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February 2014
Centralization, Decentralization and Incentive Problems in Eurozone Financial Governance: A Contract Theory Analysis

Yutaka Suzuki

We use a Contract Theory framework to analyze the mechanisms of Eurozone Financial Governance, with a focus on centralization vs. decentralization and incentive problems. By constructing a Stackelberg game model with n Ministries of Finance as the first movers, and European Central Bank as the second mover, we show that each government can create growth in its own country (self-benefit) by increasing government spending, but it will increase inflation and the euro value will fall. Since these effects are shared equally by euro countries (cost sharing), there exists an incentive to free-ride on other countries. We then analyze a solution to the free-rider problem through the penalty scheme, and derive a second best solution where a commitment not to renegotiate penalties ex-post is impossible. Lastly, we derive the parameter conditions for optimizing the EU’s current allocation of authority, “divided authority structure,” which consists of Monetary Centralization and Fiscal Decentralization. We find that what is effective is “contingency dependent governance” based on “relative sovereignty,” where there is a division of authority as the basic structure and the main body governs with leading sovereignty depending on the contingency.
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19. April 2014