In this article, I conduct an international comparison of the financial health of households using data on household wealth and indebtedness for the G-7 countries and show that, even though household borrowings in Japan were the highest among the G-7 countries, at least until 2000, household assets were also high in Japan, as a result of which household net worth and financial health in Japan were among the highest in the G-7 countries. Turning to long-term trends in Japan over time, I find that Japan has shown a sharp increase over time in household borrowings, at least until 2000, and a sharp increase over time in both household assets and household net worth, at least until 1990. It is not clear whether the greater financial health of Japanese households is due more to culture or to government policies, institutions, and other noncultural factors, but it appears that long-term trends over time in household assets, liabilities, and net worth in Japan can be explained much better by noncultural factors than by culture.

The leading economic explanation for tipping—that is, explanation why the practice is socially beneficial, not why individuals leave tips even though it is not narrowly advantageous to them—is that it confers an incentive to provide personal services. This fits many instances in which tipping is common but does not fit the taxicab business very well. I propose a novel explanation for tipping that does fit the taxi case. It is that tipping amounts to Lindahl pricing of the services of vacant cabs (essentially, reduced waiting time), a local public good for taxi customers.

This article gives an overview of the empirical studies of the determinants of students' academic performance in Japan. Recent development in the availability of achievement data have enabled researchers, including economists, to identify the determinants of education outcomes. Economists have great curiosity about the determinants of students' academic achievement because achievement gaps among school-age children result in future income inequality. Education production functions are estimated using student-level achievement data for Japanese students, with emphasis on estimating the effect of ability grouping. The empirical results show that students' test scores are strongly affected by family backgrounds, whereas school resource variables have a more limited impact. We cannot reject the hypothesis that the effect of reducing class size is zero. On the other hand, the effects of family backgrounds become small when students are grouped according to their ability, suggesting a possibility that schools can succeed in reducing the gaps in opportunities among students from different family backgrounds.

For each of the seventy Japanese four-digit SIC manufacturing industries, using annual data for 1961-90, I test the simple Cournot hypothesis of proportionality between industry price-cost margin and Herfindahl index against the non-nested alternative that the industry price-cost margin remains constant in the face of varying Herfindahl index, as it would under a simple product-differentiated Bertrand framework. I then test each of these against the alternative hybrid specification that nests both of them, and from the pairwise tests, compute likelihoods of each specification. The simple Cournot specification is the most likely for five of the industries, the simple Bertrand specification for thirty-five, and the hybrid specification for thirty.

This article explores UK fund managers and institutional investors' attitudes toward Japanese equities. We find a declining home bias of UK pension funds vis-à-vis Japanese equities since the early 1990s. However, for the most part, this decrease is a reflection of Japan's decreasing equity market and gross domestic product weights. Only in the 2000s did UK pension funds increase their Japanese equity holdings slightly. While our informants showed a comparatively high degree of variance in opinions about market factors, certain macro and institutional factors—namely, economic growth, deflation, demographics, and corporate governance—were rated high as explanatory factors for an overall low enthusiasm in Japanese equities. Our discussion confirms that these factors appear to make investments in Japan comparatively less attractive.

The question of how monetary policy translates across the yield curve is at the forefront of many recent policy debates. This debate takes on added intensity when the choice of policy regime is heterogeneous. Monetary policy targets the very short end of the yield curve, although real economic activity is largely influenced by medium- to long-term market interest rates. Given efficient market conditions, conventional wisdom asserts that changes to the monetary policy instrument (policy interest rate) lead to an immediate change in market interest rates and bond prices distributed over all maturities; yet evidence supporting this view remains elusive. Using the expectations hypothesis as a benchmark, an empirical analysis of daily yield rates for the Japanese money and government bond markets for the period 2000 to 2009 provides evidence for segmentation over the yield curve. The expectations hypothesis receives little support in either an interest rate targeting or quantitative targeting regime, but the policy impact is weaker in times of quantitative targeting; the observed concentration of impact suggests highly segmented market niches. The empirical findings invite attention of monetary policymakers to the financial system and its structural impediments, especially in an environment of economic uncertainty, low market confidence, and a binding interest rate floor.

This article investigates the relationships of a husband's education, family structure, co-residence with parents or in-laws, and child care, to labor supply and earnings among married Japanese women between 2000 and 2002. Whereas educated husbands reduce the labor supply of wives, their human capital is positively associated with productivity and earnings of the wives once they participate in the labor market. Moreover, our analysis suggests a specific division of labor within a household through which a wife's mother or mother-in-law helps her participate in the labor market, while her father or father-in-law does not affect her labor participation.

The recent financial crises in Japan and the United States have reminded central bankers of the importance of their mandate to serve as lenders of last resort. This article summarizes the key features of the two countries' crises, compares the policy response of the U.S. Federal Reserve with that of the Bank of Japan, and discusses the ways in which these responses have expanded the traditional boundaries of the lender of last resort function. The experience suggests that the conventional tool of liquidity provision, lending funds against risk-free collateral, has become inadequate for dealing with modern financial crises.