This study examines how foreign exchange interventions by the Bank of Japan are transmitted through the Yen-U.S. dollar market. The analysis focuses on the market microstructure mechanisms through which intervention-related information is incorporated into prices, using exchange rate levels and volatility to distinguish between alternative transmission channels. Using high-frequency one-minute data from 2008 to 2024, we recover the probable intraday timing of Japanese foreign exchange interventions, which is not publicly disclosed, using a Bayesian Markov Chain Monte Carlo methodology that captures executed interventions together with verbal interventions and intervention-related market expectations. The results reveal consistent intraday dynamics. Exchange rate levels generally adjust in the intended direction and remain displaced for much of the trading day, while exchange rate volatility is often elevated around intervention episodes before declining as uncertainty is resolved. Structural break tests and regime-switching analysis provide complementary evidence that these dynamics are more consistent with informational transmission than with purely temporary inventory effects. These findings demonstrate the value of a market microstructure perspective for understanding how foreign exchange interventions are transmitted and help reconcile mixed evidence in the existing intervention literature.
We examine the effects of fiscal policy on employment in Japan by considering both gender and regional differences. Our empirical results demonstrate that regardless of specification, government consumption is effective for employment recovery in many regions. Second, it especially benefits the Southern Kanto and Kansai regions, as well as their neighboring regions. Finally, we show that government consumption shocks have larger effects on female workers during recession periods.
This paper explores the feasibility of Green Transformation (GX) from a public finance perspective. Japan is the first country to issue the government-sponsored transition bonds, the GX Economy Transition Bonds. The bonds are designed to subsidize large-scale GX investments, with the future carbon pricing (CP) serving as the source of repayment. We investigate sustainability of the GX Economy Transition Bonds using the two-sector endogenous growth model that consists of dirty and clean sectors. Our simulation result shows that the optimal policy, which creates a virtuous cycle of economic and environmental progress, is unsustainable from a public finance perspective. Increasing the carbon tax rate would not improve the fiscal condition because of the Laffer curve. Decreasing the subsidy rate would improve the fiscal condition only at the cost of greater global warming and lower aggregate output. This implies that the government is facing a trilemma among decarbonization, economic growth, and fiscal sustainability unless it finances the subsidies through other fiscal sources.
This study investigates how cross-border acquisitions shape the R&D activities of acquired firms in Japan. Comparing foreign and domestic acquisitions side by side, we find that foreign acquisitions tend to reduce R&D expenditure of acquired firms, while domestic acquisitions show no such effect. We also find that post-acquisition R&D reallocation differs sharply by acquirer origin and industry relatedness. Overall, these results suggest that the post-acquisition R&D outcomes vary depending on acquirer attributes and post-acquisition integration strategies.
Oil price shocks characterized by sharp increases in crude oil prices have historically had severe adverse effects on the Japanese economy. However, how such disruptions manifest themselves at the industry level and what adjustments they induce remain insufficiently understood. This study defines the Net Oil Price Increase (NOPI)—constructed following Hamilton (1996, 2003)—as an oil price shock and examines its effects on production and prices in the Aggregate Industry and 18 Japanese manufacturing industries. By comparing the aggregate and industry-level responses, this study seeks to provide a multifaceted interpretation of how oil price shocks affect Japanese industries. The analysis uses two subsamples: January 1978 to December 2002 and January 2003 to December 2019. The results indicate that the Aggregate Industry is affected by supply-side constraints in both periods, although the timing of these effects differs between the two subsamples. By contrast, the responses of individual industries vary substantially across periods. In the pre-2003 subsample, many individual industries exhibit supply-side effects similar to those observed for the Aggregate Industry. However, in the post-2003 subsample demand-side responses associated with precautionary stockpiling, the postponement of purchases, and price negotiations are observed. These results show that the effects of oil price shocks are not confined to supply-side channels within individual industries, but vary across industries, with both their magnitude and transmission channels changing substantially across sample periods.
