Tokyo Center for Economic Research

The Latest TCER Working Papers

January 2015
Effects of the Great East Japan Earthquake on Subjective Well-Being
Takuya Ishino, Akiko Kamesaka, Toshiya Murai and Masao Ogaki

Using a large panel data set that samples over 4000 Japanese, we analyze changes in people’s subjective well-being (happiness) and altruistic worldview before and after the Great East Japan Earthquake. As a result we find that 1) more people replied that their happiness improved after the earthquake than said it worsened, and also that 2) many more Japanese people became more altruistic since the earthquake, even in the most affected areas. One possible interpretation of these results is that an increase in altruism due to the earthquake spurred people to give to charity, which in turn increased their happiness. Our regression analysis yields results that are consistent with this story.
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December 2014
Reputation and Liquidity Traps
Taisuke Nakata

Can the central bank credibly commit to keeping the nominal interest rate low for an extended period of time in the aftermath of a deep recession? By analyzing credible plans in a sticky-price economy with occasionally binding zero lower bound constraints, I find that the answer is yes if contractionary shocks hit the economy with sufficient frequency. In the best credible plan, if the central bank reneges on the promise of low policy rates, it will lose reputation and the private sector will not believe such promises in future recessions. When the shock hits the economy sufficiently frequently, the incentive to maintain reputation outweighs the short-run incentive to close consumption and inflation gaps, keeping the central bank on the originally announced path of low nominal interest rates.
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December 2014
Post-Crisis Slow Recovery and Monetary Policy
Daisuke Ikeda and Takushi Kurozumi

In the aftermath of the recent financial crisis and subsequent recession, slow recoveries have been observed and slowdowns in total factor productivity (TFP) growth have been measured in many economies. This paper develops a model that can describe a slow recovery resulting from an adverse financial shock in the presence of an endogenous mechanism of TFP growth, and examines how monetary policy should react to the financial shock in terms of social welfare. It is shown that in the face of the financial shocks, a welfare-maximizing monetary policy rule features a strong response to output, and the welfare gain from output stabilization is much more substantial than in the model where TFP growth is exogenously given. Moreover, compared with the welfare-maximizing rule, a strict inflation or price-level targeting rule induces a sizable welfare loss because it has no response to output, whereas a nominal GDP growth or level targeting rule performs well, although it causes high interest-rate volatility. In the presence of the endogenous TFP growth mechanism, it is crucial to take into account a welfare loss from a permanent decline in consumption caused by a slowdown in TFP growth.
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November 2014
Taking the Lord’s Name in Vain: The Impact of Connected Directors on 19th century British Banks
Masami Imai and Richard S. Grossman

This paper utilizes data on the presence of prominent individuals。ェthat is, those with political (e.g., Members of Parliament) and aristocratic titles (e.g., lords)–on the boards of directors of English and Welsh banks from 1879-1909 to investigate whether the appointment of well-connected directors enhanced equity value for bank shareholders. Our analysis of panel data shows that the appointment of connected directors did not increase the rate of return on bank equity. In fact, we find that the appointment of MPs to directorships had negative effects on bank equity returns. Our event-study analysis corroborates this finding, showing that a bank。ッs shares exhibited negative abnormal returns when their directors were elected to Parliament. Taken together, our results indicate that connected directors yielded little–or even negative–economic payoff to bank shareholders in pre-war Britain.
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November 2014
An Experimental Study of Money Illusion in Intertemporal Decision Making
Tetsuo Yamamori, Kazuyuki Iwata and Akira Ogawa

To examine the degree to which price fluctuations affect how individuals approach an intertemporal decision-making problem, we conduct a laboratory experiment in which subjects spend their savings on consumption over 20 periods. In the control treatment, the commodity price is constant across all periods. In the small (large) price-fluctuation treatment, the price rate of change is always 1% (20%), and the rate of change of savings is always the same as the commodity price. Therefore, the optimal amount of consumption is the same in all three treatments. Our main findings are threefold. First, the magnitude of misconsumption (i.e., the deviation from optimal consumption) is significantly high in order of the control, small price-fluctuation, and large price-fluctuation treatments. Second, in the control treatment, the magnitude of misconsumption shrinks over time, whereas it gradually increases in the small and large price-fluctuation treatments. Finally, regardless of the presence of price fluctuations, subjects exhibit under-consumption (over-saving) behavior, and the presence of price fluctuations strengthens such a tendency.
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October 2014
Price and Quality Changes in Outsiders of Regional Trade Agreements
Toshiyuki Matsuura, Kazunobu Hayakawa, Nuttawut LAKSANAPANYAKUL and Yuta Watabe

Countries excluded from a regional trade agreement face disadvantages in tariffs when exporting to member countries. In this context, previous studies found that such excluded countries, i.e., outsiders, lower their export prices. In contrast, this study aims to examine not only prices but also the quality of outsiders。ッ exports. Specifically, we first estimate the quality of products exported from each country to Thailand under certain tariff schemes. In addition to our estimates on cross-price elasticity, we use this measure to compute the potential magnitude of trade diversion for outsiders. Then, we investigate the relationship between this trade diversion and changes in the quality of exports from outsiders. Consequently, we found that only outsiders exporting higher quality products exhibited a greater improvement in quality to decrease the negative effect of tariff disadvantages.
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14. January 2015


We are pleased to inform you that the 16th Macro Conference will be held at Keio University’s Mita Campus on Saturday-Sunday, November 29-30, 2014. If you are interested in submitting a paper to the conference, please send your paper by email as an attached file to all the four program committee members shown below. There will be no particular topic for this conference, and any macroeconomics-related paper will be welcome, whether it is theoretical or empirical.

The conference will receive financial supports this year from the Tokyo Center for Economic Research (TCER), Faculty of Economics, Keio University, the UTokyo Price Project, Research Center for Economic and Social Risks, Hitotsubashi University, Research Grant: “Japan’s international adjustments under the aging and population decline”, and the Institute of Social and Economic Research of Osaka University.

The deadline of submission is Sunday, August 31, 2014 (Japan time). Full papers are preferred but a 10-page abstract is also acceptable. Also, please suggest two individuals as designated discussants, although it is not necessary to contact them in advance. In either case, please make sure to send your full paper to the four program committee members and to the designated discussant by Friday, October 31, 2014 (Japan time). We will inform you of our decision on or around Tuesday, September 30, 2014.

We will pay the travel and lodging expenses of all paper presenters, designated discussants, and chairpersons. However, we may not be able to pay for the travel expenses of those coming from abroad.

We look forward to receiving many interesting submissions.

With best wishes,

Co-Sponsors/Organizing Committee
Naohito Abe, Tokuo Iwaisako (Hitotsubashi University)
Yoshiyasu Ono (Osaka University)
Masaya Sakuragawa (Keio University)
Tsutomu Watanabe (University of Tokyo)

Program Committee (to which submissions should be sent)
Kosuke Aoki (University of Tokyo)
Kazuo Ogawa (Osaka University)
Etsuro Shioji (Hitotsubashi University)
Yasuo Hirose (Keio University)
(Please send your paper to all four of us, simultaneously.)

20. June 2014

[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