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This book answers the question of how exactly property price
indexes should be constructed. The formation and collapse of
property bubbles has had a profound impact on the economic
administration of many nations. The property price bubble that
began around the mid-1980s in Japan has been called the 20th
century's biggest bubble. In its aftermath, the country faced a
period of long-term economic stagnation dubbed the "lost decade."
Sweden and the United States have also faced collapses of property
bubbles in the 20th and early 21st centuries, respectively. It has
been pointed out that the "information gap" that existed between
policy-making authorities and the property (including housing) and
financial markets was a problem. In 2009, the IMF proposed the
creation of a housing price index to the G20 in order to fill this
information gap, and the proposal was adopted. Furthermore, in
2011, it was suggested that the next economic crisis would be
caused by a bubble in commercial property prices, and it was
decided to create a commercial property index as well. This book
provides practical examples of how the theory of property price
indexes can be applied to the issues of property as a
non-homogenous good and a technological and environmental change.
This is the first book to investigate individual's pessimistic and
optimistic prospects for the future and their economic consequences
based on sound mathematical foundations. The book focuses on
fundamental uncertainty called Knightian uncertainty, where the
probability distribution governing uncertainty is unknown, and it
provides the reader with methods to formulate how pessimism and
optimism act in an economy in a strict and unified way. After
presenting decision-theoretic foundations for prudent behaviors
under Knightian uncertainty, the book applies these ideas to
economic models that include portfolio inertia, indeterminacy of
equilibria in the Arrow-Debreu economy and in a stochastic
overlapping-generations economy, learning, dynamic asset-pricing
models, search, real options, and liquidity preferences. The book
then proceeds to characterizations of pessimistic ( -contaminated)
and optimistic ( -exuberant) behaviors under Knightian uncertainty
and people's inherent pessimism (surprise aversion) and optimism
(surprise loving). Those characterizations are shown to be useful
in understanding several observed behaviors in the global financial
crisis and in its aftermath. The book is highly recommended not
only to researchers who wish to understand the mechanism of how
pessimism and optimism affect economic phenomena, but also to
policy makers contemplating effective economic policies whose
success delicately hinges upon people's mindsets in the market.
Kiyohiko Nishimura is Professor at the National Graduate Institute
for Policy Studies (GRIPS) and Professor Emeritus and Distinguished
Project Research Fellow of the Center for Advanced Research in
Finance at The University of Tokyo. Hiroyuki Ozaki is Professor of
Economics at Keio University.
The notion that innovation in information technology could spark a
revitalization of the Japanese economy became a hot topic in 2000,
and the Japanese government announced an e-Japan Strategy for
creating a"knowledge emergent society"in January 2001. However,
just went a consensus seemed to be emerging regarding the
importance of IT innovation in Japan, the country's IT industries
were deeply influenced by a recession that originated in the U.S.
Although economic conditions have improved, strong, IT-driven
economic growth in Japan has not bounced back. Using a newly
constructed set of data, this book examines how the Japanese
economy has been affected by advances in information and
communications technology, and whether Japan's experience with IT
advancement was a short-lived bubble or is part of a truly
revolutionary change in the Japanese economy that will lead to
long-term growth. The authors discuss similarities and differences
between Japan's experience with IT innovation and that of the
United States, where IT is thought to have played a major role in
stimulating the economy.
Several years have passed since the 'store wars' over barriers to foreign products at Japanese distribution firms. Yet among English-speaking readers, how these firms operate remains a puzzle. In this book, the best Japanese scholars in their fields attempt to unravel that puzzle. Avoiding culture-based explanations, they employ a systematic and rigorous economic logic---yet, since they also avoid mathematical notation, the argument remains accessible to generalist readers.
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