Skip to main content


Policy Uncertainty in Japan
Elif C. Arbatli, International Monetary Fund
Steven J. Davis, University of Chicago and NBER
Arata Ito, Research Institute of Economy, Trade and Industry
Naoko Miake, International Monetary Fund
Sagiri Kitao, University of Tokyo

Arbatli, Davis, Ito, and Miake develop new economic policy uncertainty (EPU) indices for Japan from January 1987 onwards, building on the approach of Baker, Bloom and Davis (2016). Each index reflects the frequency of newspaper articles that contain certain terms pertaining to the economy, policy matters, and uncertainty. Their overall EPU index co-varies positively with implied volatilities for Japanese equities, exchange rates and interest rates and with a survey-based measure of political uncertainty. The EPU index rises around contested national elections and major leadership transitions in Japan, during the Asian financial crisis and in reaction to the Lehman Brothers failure, U.S. debt downgrade in 2011, Brexit referendum, and Japan's deferral of a consumption tax hike. The researcher's uncertainty indices for fiscal, monetary, trade, and exchange rate policy co-vary positively but also display distinct dynamics. For example, their trade policy uncertainty (TPU) index rocketed upwards when the U.S. withdrew from the Trans-Pacific Partnership in January 2017. VAR models imply that upward EPU innovations foreshadow deteriorations in Japan's macroeconomic performance, as reflected by impulse response functions for investment, employment and output. Arbatli, Davis, Ito, and Miake's study adds to evidence that credible policy plans and strong policy frameworks can favorably influence macroeconomic performance by, in part, reducing policy uncertainty.


This paper was distributed as Working Paper 23411, where an updated version may be available.

The Great Disconnect: The Decoupling of Wage and Price Inflation in Japan
Takeo Hoshi, University of Tokyo and NBER
Anil K Kashyap, University of Chicago and NBER
Daiji Kawaguchi, University of Tokyo

Hoshi and Kashyap take some well-known observations about the structure of the Japanese labor market and add new evidence about how it has evolved to study inflation in Japan. Their key finding is that labor market dynamics shifted after 1998 so that correlations between labor market tightness and wages weakened noticeably. This change was accompanied in a break in the relationship between wages and prices, so wage inflation has become a much less important determinant of price inflation.

Meritocracy and Its Discontents:
Evidence from Centralizing and Decentralizing School Admissions
Mari Tanaka, Hitotsubashi University
Yusuke Narita, Yale University
Chiaki Moriguchi, Hitotsubashi University
Yeon-Koo Che, Columbia University

Tanaka, Narita, and Moriguchi investigate the impacts of centralizing school admissions in higher education. In doing so, they take advantage of the world’s first known implementation of centralized admissions and its subsequent reversals in early twentieth-century Japan. This centralization was designed to make the school seat allocation more meritocratic, but the researchers find a tradeoff between meritocracy and equal regional access to higher education. Specifically, in the short run, in line with theoretical predictions, the centralization led students to apply to more selective schools and make more inter-regional applications. However, as high ability students were located disproportionately in urban areas, the centralization caused urban applicants to crowd out rural applicants from advancing to higher education. Moreover, these impacts were persistent: Four decades later, compared to the decentralized system, the centralized admissions increased the number of career elites (e.g, high income earners) born in urban areas relative to those born in rural areas.

Managerial Talent and Economic Performance: Evidence from Discontinuities in Douglas MacArthur’s Economic Purge
Melissa Dell, Harvard University and NBER
Sahar Parsa, New York University
Hideaki Miyajima, Waseda University

Managerial Talent and Economic Performance: Evidence from Discontinuities in Douglas MacArthur’s Economic Purge

The Collateral Channel versus the Bank Lending Channel: Evidence from a Massive Earthquake
Iichiro Uesugi, Hitotsubashi University
Daisuke Miyakawa, Hitotsubashi University
Kaoru Hosono, Gakushuin University
Arito Ono, Chuo University
Hirofumi Uchida, Kobe University
David S. Scharfstein, Harvard University and NBER

Uesugi, Miyakawa, Hosono, Ono, and Uchida examine the existence of the collateral and the bank lending channels simultaneously and compare their economic significance, by taking advantage of exogenous shocks to a firm's tangible assets and a bank's net worth caused by the massive Tohoku earthquake in 2011. They obtain the following findings: (1) damages to a firm's tangible assets and to the net worth of its primary banks lead to deterioration in firm's credit availability, which lends support to the existence of both the collateral and the bank lending channels; (2) firms that faced a tighter credit constraint after the earthquake have lower amount of borrowing outstanding and larger fall in the level of production and sales activities; (3) in aggregate, the damage caused by the earthquake and transmitted through the two channels substantially decrease output in the region.

The Impact of E-Commerce on Relative Prices and Consumer Welfare
Yoon J. Jo, Texas A&M University
Misaki Matsumura, Columbia University
David Weinstein, Columbia University and NBER
Mototsugu Shintani, University of Tokyo

Using Japanese data on intercity prices and expenditures by retail outlet type, Jo, Matsumura, and Weinstein find that the entry of e-commerce firms reduced the rate of price increase for goods sold intensively online relative to other goods, and significantly reduced intercity price dispersion of goods sold intensively online but had no effect on other goods. The researchers overcome endogeneity issues by using historical catalog sales as an instrument for e-commerce sales intensity and estimate that reductions in price dispersion raised welfare by 0.4 percent. E-Commerce also lowered variety adjusted prices on average by 0.6 percent, and more in cities with highly educated populations.



Ali Akkemik, Yamaguchi University
Shiro P. Armstrong, Australian National University
John Beirne, Asian Development Bank Institute
Jess Diamond, Hosei University
Peter Drysdale, Australian National University
Joseph Fraser, University of Nantes
Hiroshi Fujiki, Chuo University
Kaku Furuya, Daito Bunka University
Nobuki Hayashi, The Norinchukin Bank
Bihong Huang, Asian Development Bank Institute
Hiromi Inami, Kyorin University
Richard Jerram, Bank of Singapore
Andrew L. Johnson, Texas A&M University
Nobuo Kagomiya, ESRI
Akiko Kamesaka, Aoyama Gakuin University
Keiichiro Kobayashi, Keio University
David Lowe, Australian Embassy
Atsushi Maki, Keio University
Kohei Matsumura, Bank of Japan
Daisuke Miyakawa, Hitotsubashi University
Wataru Miyamoto, University of Hong Kong
Bennett Morrison, University of Nantes
Kazuki Motohashi, Tufts University
Nobuko Nagase, Ochanomizu University
Hiroshi Nomura, ESRI
Seki Obata, Keio University
Nobuyuki Oda, Kyorin University
Mitsuaki Okabe, Keio University
Keiko Okada, ESRI
Arito Ono, Chuo University
Robert Owen, University of Nantes
Ami Ozawa, MUFG Bank
Paolo Piacentini, Università di Roma, La Sapienza
Yoshio Sasahira, MUFG Bank
Shigenori Shiratsuka, Keio University
Sijan Thapa, International University of Japan
Hirofumi Uchida, Kobe University
Iichiro Uesugi, Hitotsubashi University
Takahiro Yamada, Penn State
Junichi Yamasaki, Kobe University
Yushi Yoshida, Shiga University
Naoyuki Yoshino, Asian Development Bank Institute

More from NBER

In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, and the Bulletin on Health — as well as online conference reports, video lectures, and interviews.

Economics of Digitization Figure 1
  • Article
The NBER Economics of Digitization Project, established in 2010 with support from the Alfred P. Sloan Foundation, provides a forum for disseminating research...
  • Lecture
Claudia Goldin, the Henry Lee Professor of Economics at Harvard University and a past president of the American...
2020 Methods Lecture Promo Image
  • Lecture
The extent to which individual responses to household surveys are protected from discovery by outside parties depends...