A Myth of "the Keynesian before Keynes:" Low Interest Rate Policy in the Early 1930s in Japan

Departing from the gold standard was the necessary condition for early recovery from the Great Depression in 1930s (Eichengreen and Sachs[1985]). Then, was it the sufficient condition for an independent monetary policy? I explore Japan's monetary policy during the interwar period, focusing on the macroeconomic policy innovation in the early 1930s. I explore the view of the Japanese policymakers at that time, making use of newly available archives from the Bank of Japan. I derive a new series of representative long-term interest rate data from the market price of one particular government bond. Then, I explore the relationship between long-term interest rates of Japan and the two financial centers, Great Britain and the United States. The Japanese experience shows how strong the Golden Fetters were during the post-gold-standard era. The institution of the gold standard had an enduring influence on Japanese policymakers, even after its constraints were no longer formally binding.

A Reassessment of Japan's Monetary Policy during the Great Depression: The Constraints and Remedies

Temin [1989] and Eichengreen [1992] argue that monetary policy played a key role in each country's economic performance during the Great Depression, and that some European policymakers hesitated to pursue an expansionary monetary policy even after departing from gold. Why did these policymakers not pursue the opportunities they were able to pursue to the fullest extent? This study explores this issue by looking at the case of Japan, focusing on the constraints it faced and the remedies available to it as a small, open economy. This study explores the relationship between interest rates in Japan and in the major international financial centers, using a new series of representative long-term interest rates and narratives. This study reveals that Japan imposed a restrictive monetary policy on itself even after departing from the gold standard. Japan did so because it needed to maintain its ties both with its trading partners and with the international financial markets.

Sustainability of Public Debt: Evidence from Pre-World War II Japan

Japan defaulted on its public debts only once throughout its modern history, after World War II (WWII). How did Japan lose its ability to sustain its public debts? This paper explores the sustainability of public debts in Japan before and during WWII. First, this paper reviews the brief history of pre-WWII public finance in Japan with reference to some narrative evidence, data, and previous works. Second, this paper conducts three stages of econometric analyses. It tests Ricardian neutrality of public debt. It tests the dynamic efficiency of Japanese economy, and it conducts Bohn's tests for the relationship between public debt and primary fiscal balance. The tests indicate that Japanese public debts were sustainable until 1931, and unsustainable in and after 1932. Third, this paper interprets the results of quantitative analyses with narrative modes of analysis. During the 1930s, Japan lost its fiscal discipline because of the military's effective veto over budgetary processes and because of the absence of pressure for sound fiscal policy from international financial markets.Length: 35 pages

Why did Countries Adopt the Gold Standard? Lessons from Japan

Why did policymakers adopt the gold standard? Although previous research has identified ex post effects of gold standard adoption on trade and bond yields, few studies have sought to understand whether these were the actual outcomes of interest to policymakers at the time of adoption. We examine Japan's adoption of the gold standard in 1897 to understand both the ex ante motives policymakers gave for wanting to go onto the gold standard and the ex post effects of gold standard adoption. By focusing on multiple outcome variables that were of interest to contemporaries, we are able to shed light on the political economy of the adoption of fixed exchange rates. In contrast to previous studies examining bond yields, we find little evidence that joining the gold standard reduced Japan's country risk or that it resulted in a domestic investment boom. On the other hand, we find that membership in the gold standard increased bilateral trade flows. The boost in trade appears to have been largest between Japan and its trading partners on the silver standard, suggesting that the depreciation of gold against silver from 1897-1914 increased the competitiveness of Japanese exports.

The Quantum-Classical Transition in Nonlinear Dynamical Systems

Viewed as approximations to quantum mechanics, classical evolutions can violate the positive-semidefiniteness of the density matrix. The nature of this violation suggests a classification of dynamical systems based on classical-quantum correspondence; we show that this can be used to identify when environmental interaction (decoherence) will be unsuccessful in inducing the quantum-classical transition. In particular, the late-time Wigner function can become positive without any corresponding approach to classical dynamics. In the light of these results, we emphasize key issues relevant for experiments studying the quantum-classical transition.Comment: 4 pages, multicol revtex (2 figures

Quantum communication via a continuously monitored dual spin chain

We analyze a recent protocol for the transmission of quantum states via a dual spin chain [Burgarth and Bose, Phys. Rev. A 71, 052315 (2005)] under the constraint that the receiver's measurement strength is finite. That is, we consider the channel where the ideal, instantaneous and complete von Neumann measurements are replaced with a more realistic continuous measurement. We show that for optimal performance the measurement strength must be "tuned" to the channel spin-spin coupling, and once this is done, one is able to achieve a similar transmission rate to that obtained with ideal measurements. The spin chain protocol thus remains effective under measurement constraints.Comment: 5 pages, revtex 4, 3 eps figure

The Quantum Emergence of Chaos

The dynamical status of isolated quantum systems, partly due to the linearity of the Schrodinger equation is unclear: Conventional measures fail to detect chaos in such systems. However, when quantum systems are subjected to observation -- as all experimental systems must be -- their dynamics is no longer linear and, in the appropriate limit(s), the evolution of expectation values, conditioned on the observations, closely approaches the behavior of classical trajectories. Here we show, by analyzing a specific example, that microscopic continuously observed quantum systems, even far from any classical limit, can have a positive Lyapunov exponent, and thus be truly chaotic.Comment: 4 pages, 4 figure