Research

Work in Progress

• Firms’ Internationalization Decisions and Demand Learning (with E. Ogawa)

  This study investigates the rationale for firms to establish foreign affiliates without export experience in the affiliate destinations despite facing demand uncertainty. As over half of Japanese firms start their first internationalization process through foreign direct investment (FDI), we attempt to explain this pattern by developing a statistical decision-making model in which firms make decisions about entering foreign markets via FDI or exports under demand uncertainty. Our model incorporates the proximity-concentration tradeoff and the demand-learning mechanism through which firms predict their demand level based on information about the number and average productivity of their neighbors. We analytically show that demand-learning from neighbors affects firms’ entry and exit decisions regarding FDI. We provide supporting evidence for the main predictions of the model by using a rich micro-level dataset of Japanese multinational firms.

• General Equilibrium Analysis of Fiscal Transfers in an Aging Society (with Y. Uemura)

  We analyze fiscal transfer policies using a quantitative spatial general equilibrium model given heterogeneous local productivities and amenities, migration of young and elderly population, and inter-regional trade. We confirm that fiscal transfers improve welfare by reducing congestion in urban areas and increasing public services and real wages in rural areas. Contrary to the literature, introducing mobility of elderly population indicates possibility of optimal transfers that enable the central government to accomplish welfare gains without sacrificing national output.

• True Impact of Japan’s Covid State of Emergency on Consumption

  This study examines the effect of the Covid pandemic containment measures on Japan’s consumption, using high-frequency credit card data. Based on the assumption that neighboring municipalities on prefectural borders with different containment policies have an equivalent fear of contagion, this study distinguishes the negative effect of containment measures on consumption from the effect of fear, by employing a synthetic control method. Specifically, it constructs a synthetic control municipality that faces fear equal to that faced by untreated municipalities in the donor pool, and whose post-treatment consumption corresponds to the counterfactual consumption of the treated municipality without containment intervention. Comparing the synthetic control and treated municipalities’ consumption with prefectural borders, allows the identification of the true impact of the containment policies on consumption. These results indicate that, the negative effects of the state of emergency on consumption is much lower than the extreme decline in consumers’ spending.

• Multinational production and wage inequality (with Y. Uemura)

• Rising Income Inequality and Regional Economic Divergence: A Distributional Approach (with T. Ohno and T. Omata)

Presentations

• “Firms’ Internationalization Decisions and Demand Learning” on February 5th, 2024, at Economic Research Institute for ASEAN and East Asia (ERIA) Seminar in Jakarta, Indonesia

• “Firms’ Internationalization Decisions and Demand Learning” on January 12th, 2024, at KIER-CAPS Research Workshop on Applied Economics

• “Firms’ Internationalization Decisions and Demand Learning”(「企業の国際化の意思決定と需要学習」in Japanese) on November 28th, 2023, at the DP seminar of RIETI

• “Multinational Firms’ Internationalization Decisions and Demand Learning from Neighbors” on October 27th, 2023, at RIETI “Exchange Rates and International Currency“ project

• “General Equilibrium Analysis of Fiscal Transfers in an Aging Society” on March 22th, 2023, at Kyoto University Joint Usage and Research Center

• “General Equilibrium Analysis of Fiscal Transfers in an Aging Society” on March 14th, 2023, at Policy Research Institute, Ministry of Finance

• “Foreign Direct Investment under Uncertainty: Evidence from Japanese Foreign-Affiliated Firms” on August 29th, 2022, at RIETI “Exchange Rates and International Currency“ project