Academic journal article NBER Reporter

Twenty-Sixth NBER Summer Institute Held in 2005

Academic journal article NBER Reporter

Twenty-Sixth NBER Summer Institute Held in 2005

Article excerpt

In the summer of 2005, the NBER held its twenty-sixth annual Summer Institute. More than 1300 economists from universities and organizations throughout the world attended. The papers presented at dozens of different sessions during the four-week Summer Institute covered a wide variety of topics. A complete agenda and many of the papers presented at the various sessions are available on the NBER's web site by clicking Summer Institute 2005 on our conference page, www.nber.org/confer.

Oda and Ueda empirically investigate monetary policy in Japan in the zero- interest-rate environment that has held sway since 1999. In particular, they focus on the effects of the zero-interest-rate commitment and of quantitative monetary easing on medium-to-long-term interest rates in Japan. By applying a version of the macro-finance approach, involving a combination of estimation of a structural macro-model and calibration of time-variant parameters to the yield curve observed in the market, they can decompose interest rates into expectations and risk premium components and simultaneously extract the market's perception of the Bank of Japan's (BOJ's) willingness to carry on its zero-interest-rate policy. Oda and Ueda tentatively conclude that the BOJ's monetary policy since 1999 has functioned mainly through the zero-interest-rate commitment, which has led to declines in medium- to long-term interest rates. They also find some evidence that, until the end of 2003, raising the reserve target may have been perceived as a signal indicating the BOJ's accomodative policy stance, although the size of the effect is not large. The portfolio rebalancing effect--either by the BOJ's supplying ample liquidity or by its purchases of long-term government bonds--is found to be significant.

Coleman argues that the growth slowdown in Japan in the 1990s was a consequence of a structural transformation set in motion by the emergence of lower cost producers of manufactured goods. Prior to the 1900s, Japan had achieved a significant cost advantage in producing various goods, which led to an allocation of resources towards this sector. Indeed, the fraction of resources in the manufacturing sector in Japan exceeded that of other countries in a similar stage of development. The emergence of largely populated developing countries, such as China, lowered the profitability of the manufacturing sector in Japan. This required a substantial reallocation of labor and capital resources from the manufacturing to the service sector. This process of structural transformation led to the growth slowdown in Japan during the 1990s.

In the 30-year period between 1960 and 1990, Japan saw labor productivity rise from a level of 27 percent of that of the United States to 87 percent of that of the United States. This development miracle can be explained by an initial low capital stock and measured variations in Total Factor Productivity (TFP). These facts motivate the investigation into the sources of Japanese TFP variations by Braun, Okada, and Sudou. They consider Japanese and U.S. data that is filtered to retain medium-cycle events, such as the productivity slow down in the 1970s. An investigation of Japanese medium cycles reveals an important role for the diffusion of usable ideas from the United States to Japan. U.S. research and development (R and D) leads Japanese TFP by four years and accounts for as much as 60 percent of the variation in medium-term-cycle Japanese TFP. Japanese R and D, in contrast, is coincident with Japanese TFP. Simulations designed to isolate the roles of Japanese and U.S. R and D find that the diffusion of knowledge from the United States is a key driver of Japanese medium cycles.

Ono poses three fundamental questions about lifetime employment in Japan: How big is it? How unique is it? And, how is it changing? He examines various concepts and methods of estimating lifetime employment and concludes that it covers roughly 20 percent of the Japanese labor force. …

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