Cooperation in Repeated Prisoner’s Dilemma with Outside Options

経済学 / EconomicsIn many repeated interactions, repetition is not guaranteed but instead must be agreed upon. We formulate a model of voluntary repetition by introducing outside　options to a repeated Prisoner’s Dilemma and investigate how the structure of outside options affects the sustainability of mutual cooperation. When the outside　option is deterministic and greater than the value of mutual defection, the lower bound of the discount factors that sustain repeated cooperation is greater than the　one for ordinary repeated Prisoner’s Dilemma, making cooperation more difficult. However,stochastic outside options with the same mean may reduce the lower　bound of discount factors as compared to the deterministic case. This is possible when the stochasticity of the options increases the value of the cooperation phase　more than the value of the punishment phase. Necessary and sufficient conditions for this positive effect are given under various option structures.JEL Classification Codes: C73http://www.grips.ac.jp/list/jp/facultyinfo/yasuda_yosuke

Japan\u27s Monetary Policy Transition, 1955-2005

経済学 / EconomicsThis paper surveys the postwar evolution of Bank of Japan (BOJ) monetary policy. Using both qualitative and quantitative data, we describe the changes in the money supply process in response to changing institutional constraints. We focus on the transition from quantitative to qualitative control mechanisms, illuminating, in particular, the important role of the BOJ\u27s lending guidance (window guidance) in the early periods and financial liberalization in subsequent periods. Monetary policy reaction functions are estimated and used to verify major changes in policy instruments, targets, and indicators.JEL Classification Codes: E42, E52, E51http://www.grips.ac.jp/list/jp/facultyinfo/rhodes_james

Localized knowledge spillovers and patent citations: A distance-based approach (revised version)

経済学 / EconomicsWe develop a new distance-based test of localized knowledge spillovers that embeds the concept of control patents. Using microgeographic data, we identify localization distance for each technology class while allowing for spillovers across geographic units. We revisit the debate by Thompson and Fox-Kean (2005a,b) and Henderson, Jaffe and Trajtenberg (2005) on the existence of localized knowledge spillovers, and find solid evidence supporting localization even when using fine-grained controls. We further relax the assumption of perfect controls, and show that our distance-based test detects localization for the majority of technology classes unless hidden biases induced by imperfect controls are extremely large.JEL Classification Codes: O31, R12http://www.grips.ac.jp/list/jp/facultyinfo/okamoto_ryosuke