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Japan's quest for energy security : risks and opportunities in a changing geopolitical landscape
(2011)
For much of the 20th century, economic growth was fueled by cheap oil-based energy supply. Due to increasing resource constraints, however, the political and strategic importance of oil has become a significant part of energy and foreign policy making in East and Southeast Asian countries. In Japan, the rise of China’s economic and military power is a source of considerable concern. To enhance energy security, the Japanese government has recently amended its energy regulatory framework, which reveals high political awareness of risks resulting from the looming key resources shortage and competition over access. An essential understanding that national energy security is a politically and economically sensitive area with a clear international dimension affecting everyday life is critical in shaping a nation’s energy future.
It has often been asked whether today´s Japan will be able to move into new and promising industries, or whether it is locked into an innovation system with an inherent inability to give birth to new industries. One argument reasons that the thick institutional complementarities among labour, innovation, and finance among its enterprises and the public sector favour industrial development in sectors of intermediate uncertainty, while it is difficult to move into areas of major uncertainty. In this paper, we present the case of the silver industry or, somewhat more prosaically, the 60+ or even 50+ industry, for which most would agree that Japan has indeed become a lead market and lead producer on the global market. For an institutional economist, the case of the silver industry is particularly interesting, because Japan´s success is based on the cooperation of existing actors, the enterprise and public sector in particular, which helped overcome the information uncertainties and asymmetries involved in the new market by relying on several established mechanisms developed well before. In that sense, Japan´s silver industry presents a case of of what we propose to call successful institutional path activation with the effect of an innovative market creation, instead of the problematic lockin effects that are usually associated with the term path dependence.
The unintended consequences of the debt ... will increased government expenditure hurt the economy?
(2011)
In 2008, governments in many countries embarked on large fiscal expenditure programmes, with the intention to support the economy and prevent a more serious recession. In this study, the overall impact of a substantial increase in fiscal expenditure is considered by providing a novel analysis of the most relevant recent experience in similar circumstances, namely that of Japan in the 1990s. Then a weak economy with risk-averse banks seemed to require some of the largest peacetime fiscal stimulation programmes on record, albeit with disappointing results. The explanations provided by the literature and their unsatisfactory empirical record are reviewed. An alternative explanation, derived from early Keynesian models on the ineffectiveness of fiscal policy is presented in the form of a modified Fisher-equation, which incorporates the recent findings in the credit view literature. The model postulates complete quantity crowding out. It is subjected to empirical tests, which were supportive. Thus evidence is found that fiscal policy, if not supported by suitable monetary policy, is likely to crowd out private sector demand, even in an environment of falling or near-zero interest rates. As a policy conclusion it is pointed out that by changing the funding strategy, complete crowding out can be avoided and a positive net effect produced. The proposed framework creates common ground between proponents of Keynesian views (as held, among others, by Blinder and Solow), monetarist views (as held in particular by Milton Friedman) and those of leading contemporary macroeconomists (such as Mankiw).