Source of Finance for Social Security Reform with Redistribution

This study investigates the welfare implications of social security reforms in Japan. Based on the overlapping generations model with idiosyncratic income risk, we consider four social security reform plans: (1) gradual reduction in the replacement rate by half, (2) sudden cut in the replacement rate by half, (3) introduction of a consumption tax, and (4) introduction of a capital income tax. We compute the transition paths of each case, and find that the introduction of a consumption tax and a capital income tax improves the welfare of young and future households, based on ex-ante welfare. We also reveal that two redistribution effects of the basic public pension are keys when considering social security reforms: (a) the insurance effect on lifetime income, and (b) the intertemporal effect that affects the asset and consumption profile.Social Security Reform, Consumption Tax, Capital Income Tax

Can Cross-Border Financial Markets Create Endogenously Good Collateral in a Crisis?

In this paper, we explore whether markets can create endogenously good collateral in a crisis by analyzing a simple exchange economy where a country-specific catastrophic shock is shared between two countries. To see this possibility, we examine whether the equilibrium achieved by the time-0 complete markets with solvency constraints can be recovered in the dynamically complete markets with collateral constraints. This paper demonstrates that it is possible to recover the time-0 equilibrium outcome in a sequential manner when pricing errors occur randomly in evaluating Lucas trees at a catastrophic event. Such stochastic components may be interpreted as a policy initiative to create good collateral and yield constrained efficient outcomes at crisis periods.Solvency Constraints, Collateral Constraints, Dynamic Optimal Contract, Catastrophic Shocks

Growth experiment of narrow band-gap semiconductor PbSnTe single crystals in space (M-1)

An experiment on crystal growth of Pb(1-x)Sn(x)Te in microgravity is planned. This material is an alloy of the compound semiconductors PbTe and SnTe. It is a promising material for infrared diode lasers and detectors in the wavelength region between 6 and 30 micron. Since the electrical properties of Pb(1-x)Sn(x)Te depend greatly on the Pb/Sn ratio and crystalline defects as well as impurity concentration, homogeneous, defect-free, high-quality crystals are anticipated. Although many growth methods, such as the pulling method, the Bridgman method, the vapor growth method, etc., have been applied to the growth of Pb(1-x)Sn(x)Te, large, homogeneous, low-defect-density crystals have not yet been grown on Earth. The unsuccessful results were caused by buoyancy-driven convection in the fluids induced by the specific gravity difference between heated and cooled fluids on Earth. A crystal is grown by cooling the melt from one end of the ampoule. In crystal growth from the melt, about 30 percent of the SnTe in the melt is rejected at the solid-liquid interface during solidification. On Earth, the rejected SnTe is completely mixed with the remaining melt by convection in the melt. Therefore, SnTe concentration in the melt, and accordingly in the crystal, increases as the crystal grows. In the microgravity environment, buoyancy-driven convection is suppressed because the specific gravity difference is negligible. In that case, the rejected SnTe remains at the solid-liquid interface and its concentration increases only at the interface. If the growth rate is higher than the PbTe-SnTe interdiffusion rate, the amount of SnTe which diffuses from the interface into the melt increases as SnTe piles up at the interface, and finally it balances the amount of rejected SnTe during solidification, resulting in steady-state SnTe transportation at the interface. By using this principle, compositionally homogeneous crystals can be grown. Furthermore, low-defect-density crystals will be grown in microgravity, because convection causes crystalline defects by mising hot and cold fluids and generating temperature fluctuations in them

Income Risk, Consumption Inequality, and Macroeconomy in Japan

In this paper, using an OLG model with heterogeneous households, we investigate economic inequality in the recent decades in Japan. We decompose the causes of economic inequality into macroeconomic factors and a demographic factor, and demonstrate that the earning inequality in the model replicates the actual evolution of inequality in Japan. Based on a counterfactual simulation, we demonstrate that time-varying macroeconomic factors play an important role in the evolution of economic inequality. In particular, we show that the low growth rate of total factor productivity in the 1990s in Japan limited the dispersion of economic inequality.Income risk, Consumption inequality, Population aging

A note on risk sharing against idiosyncratic shocks and geographic mobility in Japan

In this study, using Japanese household panel data, we analyze how well idiosyncratic income risks are shared by regions. We find that geographic mobility influences individual consumption growth rates, suggesting that complete asset markets fail to exist. We reject the full insurance hypothesis for both urban and rural areas and find that the extent of risk sharing differs significantly by region

Cross-sectional Facts in Japan using Keio Household Panel Survey

We investigate economic inequalities of Japanese economy from 2004 to 2012 using the Keio household panel survey. We present cross-sectional dispersion earnings, consumption expenditure, and wealth inequalities from time-series and life cycle dimensions. Wage and hours inequalities, which are calculated from the earnings of male and female, full-time and part-time workers and correlations are provided. We also show that the residual inequalities, which are usually interpreted as idiosyncratic income risks that households face, rise over the life cycle