Quiz Ch1, Ch2 PDF

10/ · bring note-book (including iPad) To Short Quiz - > downloadSlide and paste it HERE with note do Introduction to the Japanese Economy I Chun Chen Chapter 1 Syllabus Course Content Summary Goals Reference Book...

10/ · bring note-book (including iPad) To Short Quiz - > downloadSlide and paste it HERE with note do Introduction to the Japanese Economy I Chun Chen Chapter 1 Syllabus Course Content Summary Goals Reference Book – Flath, David. The Japanese Economy. Third edition, New York: Oxford University Press. 2014. (DF) – Ohno, Kenichi. The History of Japanese Economic Development: Origins of Private Dynamism and Policy Competence. New York: Routledge. 2018. (KO)  12 23 Grading policy Class contribution 10%: attendance and class discussion Assignments and in-class quizzes 30% Mid-term Exam 30%: Students are required to take mid-term exam. Final Presentation 30%: Students will form a group to give one presentation. Income and Welfare of the Japanese Today 1. GDP 2. Revealed Preference 3. Nonmarket goods 4. The distribution of wealth 5. The underground economy 1.GDP 国内総生産 GDP: Gross Domestic Product (国内総生産) The market value of all final goods and services produced within a country in a given period of time. GDP is the market value (市場価値) …. GDP adds together many different kinds of products into a single measure of the value of economic activity Use market prices. …of all final goods and services （最終財あるいはサービス）… ALL: It includes all items produced in the economy and sold legally in markets. Final: GDP includes only the value of final goods. Goods and services: GDP includes both tangible goods and intangible services.  ….produced within a country in given time Produced: GDP includes goods and services currently produced. within a country: GDP measures the value of production within the geographic confines of a country. In a given time: usually a year or a quarter( three months) Quiz 1 Which contributes more to GDP- the production of a kilogram of pork or the production of a kilogram of caviar(キャビア)? Why? The market price of pork: $20/ kilogram the market price of caviar: $1000/ kilogram The components of GDP divided into four components – Consumption (C) 消費 – Investment (I) 投資 – Government purchases (G) 政府購入 – Net exports (NX) 純輸出 è Y=C+I+G+NX Consumption (C) 消費 Spending by households on goods and services, with exception of purchases of new housing. – Durable: cars and appliances.. – non-durable goods: food and clothing – Intangible items: haircuts and medical care Household spending on education is also included in consumption Purchase of new housing was categorized as investment Investment (I) 投資 Purchase of good that will be used in the future to produce more goods and services. – Capital equipment – Inventories – structures Government purchase (G) 政府購入 Include spending on goods and services by local, and central government. – The salaries of government workers – Expenditures on public works. Net exports (NX) 純輸出 Exports minus imports GDP per capita Japan and selected other nations 2020 Country Population (million) Exchange rate GDP per capita Canada 37,742 1.34 C$/$ 43,294 France 65,273 0.877 euros/$ 39,030 Germany 83,783 0.877 euros/$ 46,208 Italy 60,461 0.877 euros/$ 31,714 Japan 126,476 106￥/$ 40,193 UK 67,866 0.779￡/$ 41,059 US 331,002 1$/$ 63,593 OECD 1,368,991 38,218 2. Revealed preference Method: By ranking the consumption possibilities of citizens. à whether the income of the representative citizen of each country is sufficient to have purchased a comparable consumption bundle to that chosen by the other given the prices in her own country. àthe representative citizen of the USA, Canada, Australia and Spain each had a revealed preference for his bundle over that of the Japanese. à The representative Japanese had a revealed preference for her bundle over that of the representative German, Irishman and New Zealander. 3. Nonmarket goods Goods are enjoyed but not bought and sold。 a) Household production b) Amenities c) Leisure a) Household production Goods produced and consumed within the household. Eg. Child-rearing, chores…. b) Amenities Present in the environment and are not the result of human artifice. Eg. Sunshine, clean air….. c) Leisure Idleness from economic pursuits. Shadow prices of nonmarket goods Home production: forgone leisure. @ Wage rate Leisure: the value of output lost when an increment of labor is withheld either from home production or from outside employment. @ Wage rate Amenities: compensating differentials in land prices and wages Comparing the value of nonmarket goods in Japan and the USA 1. Japanese have apparently enjoyed fewer leisure hours. 2. Household production may in some ways be more significant in Japan. 3. Japan enjoys fewer amenities than does the representative American. Comparing the value of nonmarket goods in Japan and the USA This table shows few papers calculating the economic value of nonmarket goods. Hours per week devoted to various activities by men and women in Japan and other countries, 1999-2006 Japan U.S.A Canada Germany France U.K. Male Work and studies 49.1 47.4 46.6 36.1 40.8 41.6 Housework and 7.2 15.3 15.3 14.7 15.1 14.6 family member care Leisure 118.9 120.6 121.4 141.9 127.2 126.4 Female Work and studies 49.7 48.1 47 36.9 42.7 38.6 Housework and 28.6 24.8 24.4 24.5 28.8 24.3 family member care Leisure 118.3 119.9 121 131.1 125.3 129.4 Survey year 2006 2006 2005 2002 1999 2001 Source: Table 1.4; Flath, David. 2014. The Japanese Economy 4. The distribution of wealth  Gini Coefficient ジニ係数 Aggregate numerical measure of income inequality ranging from 0(perfect equality) to 1(perfect inequality).  The higher the value of the coefficient is, the higher the inequality of income distribution; the lower it is, the more equal the distribution of income. – Highly unequal income distribution: 0.5-0.7 – Relatively equal income distribution: 0.2-0.35 5. The underground economy Spending that is for illegal activities or on which taxes are owed but not paid contributes to the value of final goods and services but is deliberately concealed from government authorities and thus is not reflected in the GDP. Japan: around 5% The USA: around 5% Conclusion Japan’s state of economic development is on a par with that of the United States and the nations of Western Europe and vastly surpasses that of the lesser developed and non-industrialized nations including many of Japan’s Asian Neighbors.  Introduction to the Japanese Economy I Chun Chen Chapter 2 Postwar Recovery (1945-1952) Physical war damage US policy in occupied Japan The rise and fall of government controls over the postwar economy 1, Scalane Blockade , 2 Arial Bombing - contributed to Jon's economy after war Physical war damage cut ~ Island coming ↳ ( will had capacity to struct (but NO input)  was planned by the government Economic planning – until 1949 Price were controlled. The necessities were rationed. The government directed production and input procurement. No input and No production > - increased employment rate Shortages and infla?on In 1946, a year after the end of the war, shortages were most severe and living standards were lowest. Unemployment problem – Informal sector: small competitive individual or family firms ( small-scale retail trade and services, labor intensive, free entry, market-determined factor and product prices) Highest inflation  - Inflation Rate (Using CPI) InflaDon rate: the change in the prices of a basket of goods and services that are typically purchased by specific groups of households. !"# $% &'() * +!"# $% &'() , InflaDon rate in year 2= x 100 !"# $% &'() , CPI (Consumer Price Index): A measure of the overall cost of the goods and services bought by a typical consumer 6  currently 0. 1 % in for & Real and nominal interest rate Kumamon deposits $1000 in a bank account that pays an annual interest rate of 10%. 1 year later, Kumamon withdraws the saving $1100. Is kumamon $100 richer than 1 year ago? Purchasing power- the amount of goods and services she can buy- has risen by 10% ? 7  Kumamon only buys DVDs. In the local movie store, a DVD costs $10. Kumamon’s deposit of $1000 in the bank was equivalent to 100 DVDs. 1 year later, with $1100, how many DVDs she can buy? Ø zero inflaDon: the price of DVD remains $10. then she can buy 110 DVDs. à10% increase in her purchasing power Ø6 percent inflaDon: the price of DVD increases to $10.6. the number of DVDs she can buy is around 104. à4% increase in her purchasing power Ø10 percent inflaDon: the price of DVD increases to $11. the number of DVDs she can buy is 100. à purchasing power is the same as it was 1 year earlier. 8 Ø12 percent inflation: the price of DVD increase to 11.2. the number of DVDS she can buy is around 98. à2% decrease in her purchasing power. Ø2 percent deflation: the price of DVD falls to $9.8. the number of DVDs she can buy is around 112.à 12 percent increase in purchasing power. Real interest rate実質利子率= Nominal interest rate 名目利子率– inflation rateンフレーション 9 7 750 - - ↑ but ↑ If 50 for a coffee - 10 Industrial Policy Industrial policy refers to government authorities’ use of subsidies, tax credits, trade restrictions, antitrust exemptions, and other such measures to direct resources toward or away from specific, targeted industries. specific industry (cabe away OR invest... ) target - Designed and implemented by.. An elite bureaucracy with broad powers The Ministry of Commerce and Industry(1945-1949) MITI- the ministry of internaonal trade was on a government-to-government basis. – The Board of Trade(agency of Japanese government) supplied SCAP with all exports from Japan and obtained from SCAP all imports into Japan. A complicated schedule of ar>ficial exchange rates, varying from item to item, determined the exact terms of each transac>on between the Board of Trade and SCAP. Dodge Line Stability Joseph M. Dodge: president of Detroit Bank, believer on the free economy The main objective was to stop inflation by halting the increase in the monetary base and tightening the fiscal budget. Dodge Line -Restoring Japan’s trade to private basis, at market- determined prices. -Price subsidies were reduced -no new subsidized loan -Increase the tax rate à Successful in stopping inflaDon. But …. 5 multiple questions on October 15th Proof of Dodge line Output soon began to decline. 1950-53: Korean War – Japan became a major staging area for US troops and a major supplier of military goods. à economic boom. MITI and industrial policy MITI: The ministry of International Trade and Industry was created in 1949. Later, in 2001, renamed to the Ministry of Economy, Trade and Industry. MITI played a role in Japanese industrialization, but economists still debate its importance. Q: Was high growth achieved because of MITI or despite it?