Sunday, December 31, 2006

A Land Of Opportunity

The United States - the country which I've ever wanted to visit, is my new year's primary resolution: Next year I may go to the US if I pass the application processes to the graduate school. The United States is called "a land of opportunity". So is it to me.

In the US, I will do the following five things;

(1) I will think and talk more positively about politics.

In Japan I have thought and talked about politics. However, I couldn't be inspired by discussing politics at an intellectual place. At the graduate school which I went to, there were many students who I thought had a lot of knowledge of social science, but it seemed they usually avoided discussing politics with other students. It was likely politer for them not to bring political matters into their discussion. In some cases, it may be politer for them to do that, but in other cases, it may not be. I think an intellectual place like a university should be the free place for political and social discussions.

(2) I will broaden my perspectives on the activities in an international society.

In the US, I'll have many chances to see what I've never seen before. In some cases, I may have to know more what I've never known. In other cases, I may find I've ever done wrong things. My value judge would be changed in an inter-cultural circumstance. I hope I will change myself among many other international students to remain the same myself.

(3) I will devote myself to the researches of economic theory.

I've studied economics for about 5 years at my undergraduate and graduate school. For those years I may have taken a roundabout way to the pursuit of economics: In fact I stopped studying economics and worked for a company at one time. I gave up seeking a career of economist which I had hoped to be because I thought it very difficult to become an economist. Certainly it is very hard to make a living as an economist in any countries other than Japan and the US. But, during my several months of work experience, I came to think the possibility of becoming an economist depends on how firm my will is. I found I had to try as hard as possible.

(4) I try to know more about the US as well as Japan.

When I am in the US, it is waste of time for me not to try to know more about the way of life in the US. I want to know about the life and politics of the US if I can live in the US. This is very valuable chance that I think I will never get again in my whole life. By knowing about the US, I feel I can know more about my home country, Japan. My desire to know more about the US is no less than that to know more about the Japan.

(5) I will make friends who do a research activity with me.

In Japan I couldn't make friends who pursue a research activity with me. Certainly it was because of me: I couldn't find the friends with the same interests as me. Again I try to find the friends who have the same interests and want to learn more from them. I think I always need an open-mined sense and have to have more chances to talk to many other graduate students.

Soon the sun appears and a new year comes to us. I hope a new year will take me to the US, where I will change myself.

Statement of Objectives

Statement of Objectives (Extended Version)
Taro Okamoto

The PhD program in Economics, the Department of Economics
December 2006

This statement has four sections. The first section briefly describes my intellectual background and interests. The second section gives the reasons for applying to the Department of Economics at (Withheld), and the third section elaborates on my proposed research topics. Finally I state what I expect as my future career.

1. My Intellectual Background and Interests

While pursuing undergraduate study in economics at (Withheld) I was fascinated by two lectures: Macroeconomics and American economy.

They both had a lot of interesting topics. The lecture in Macroeconomics illuminated very realistic issues: what caused the recession and deflation in the 1990s in Japan and what expansionary fiscal policy and ultraloose monetary policy did.

And the lecture on the American economy exposed me to many interesting economists and their thoughts such as Paul R. Krugman and John K. Galbraith. I read their books with much excitement. Then the U.S. economy was booming due to the advance of information technology, whereas the Japanese economy was in prolonged recession. This contrast intrigued me and heightened my interests in the study of macroeconomics and macroeconomic policy. I wrote an essay on the booming American economy, which won the prize in the Student Essay Contest at the Department of Economics. This experience made me believe that economics helps clear up our ideas about the economy in which we live.

So I decided to pursue further study in economics and read N. Gregory Mankiw’s best-selling textbook Macroeconomics, which was easy to read and had a lot of case studies about macroeconomics as well as data on the American economy.

After obtaining a BA degree from (Withheld), I entered the Graduate School of Economics at (Withheld). There I wanted to acquire basic knowledge of quantitative analysis since I did not take any such courses when I was in (Withheld). So I took the core graduate-level courses on econometrics and statistics. I also took the course on international finance and became interested in various issues in this area.

In this course, I read some intriguing empirical articles and began to reflect on the exchange rate policy. This lecture was a key to my decision to do a master's thesis in this area. In this regard I was also lucky to have had an opportunity to take part in the relevant research project as a summer internship for two weeks at (Withheld), one of the most prominent private consulting firms in Japan.

There I helped research the economic relationship between China and Kansai region which is the west area of the Japanese Islands, and could see the actual business interaction between China and Japan. I found that the economic activities of China influence heavily those of Japan.

After receiving an MA degree in applied economics and policy from the Graduate School of Economics at (Withheld), I worked at a private company for a while. However, my desire to study economics was getting stronger day by day and so was my interest in research of the Asia-Pacific economy.

2. Proposed Research Topics

The experience of taking part in a research project on Japan's economic interaction with China at (Withheld) heightened my interest in the study of economic activities in the East-Asia region.

Japan is now highly integrated with China, ROK and many other countries in the East-Asia region. These countries have become interested in accelerating regional integration through, say, an economic partnership agreement (EPA). In addition, there has been a lively debate as to whether a common currency should be adopted.

Empirical work in this regard has been focused on the question of whether the East-Asia region constitutes an optimum currency area (OCA): Alesina, Barro and Tenreyro (2002), for example, shows empirically that there exists no clear yen area, based on the historical data on inflation, trade and co-movements of prices and outputs. Looking around the world, we can see many examples of movements toward multinational currencies: 12 countries in Europe have adopted a single currency (Euro), and 6 oil-producing countries such as Saudi Arabia, Oman and so on, have declared their intention to form a currency union by 2010.

International economic integration has advanced since Mundell (1961) first developed the concept of OCA. In today’s globalized world, it is natural for policy makers to think of adopting a common currency. In theory the exchange rate uncertainty is a serious impediment to international trade. Adoption of a common currency does away with this source of uncertainty and hence reduces the transactions costs associated with trading goods, services and assets. The resulting boost to trade integration may also promote co-movements in income, that is, business cycle symmetry.

Some economists suggest a theoretical possibility that if most trade is inter-industry, then trade integration results in greater specialization and thus asymmetric business cycles. In this case, adopting a common currency, and hence a common monetary policy, is not beneficial for the participating countries. Frankel and Rose (1998), however, found a strong positive relationship between trade integration and synchronization of business cycles, suggesting that most trade is intra-industry rather than inter-industry.

To judge an OCA, economists generally examine four linkages between countries: (1) the extent of trade integration, (2) similarity of the shocks and cycles, (3) the degree of labor mobility, and (4) the system of risk-sharing, through fiscal transfers. The greater any of the four linkages between the countries, the more suitable they are to adopt a common currency. In a way similar to Lucas Critique (1976), Frankel and Rose suggests that the traditional judgments on the fitness for OCA do not adequately take into account the impact of adopting a common currency on trade integration. Frankel and Rose thus argues that some of the criteria to determine OCA are endogenous.

In my master's thesis at (Withheld), I summarized the relevant issues on OCA from a somewhat different point of view from Frankel and Rose: Based on the research of Kawai (1993), I used a framework of game theory and tried to consider theoretically how the choice of exchange rate regimes is optimally made by each country’s monetary policymaker who pursues national objectives like low inflation and high economic growth. Specifically, I examined how the monetary policy conducted by each country affects the choice of regimes and thus the formation of currency union. The ability of each monetary authority to make a policy commitment (e.g. not to inflate or to fix the exchange rate) is essential for the nature of the regimes chosen: If all the policy makers of the participating countries can make a fully credible commitment, currency union would be both Pareto-optimal and sustainable.

As the next step I would like to pursue this line of research first by extending a literature search in this area. I then build a theoretical model, derive propositions from the model and conduct an empirical research by using econometric methods. It would be interesting to see how the conflicting interests between the participating countries affect the path towards the formation of currency union. Through the studies on the OCA and their application to the East-Asia and Pacific region, I would like to carry out a research on policy issues regarding the inter-connections between international integration, currency system and the economic structures in the countries in this region.

Looking further into the future, I hope to widen the scope of my research effort to other issues, such as the impact on domestic and neighboring economies of increased international labor mobility and of economic structural change and reform.

4. My Career Goals 

After my PhD, I would like to be a researcher and a teacher specialized in international finance with particular interests in the Asia-Pacific area. I hope to be able to contribute to a sound development of the Asian-Pacific economy in general and its financial system in particular through a policy-analytic research, sometimes in collaboration with international financial institutions as well as the governmental and private think-tanks.

In addition, by speaking at seminars and writing articles for non-academic journals I would like to heighten the public awareness of the problems in international economy lying ahead of us, thereby facilitating the adoption of a sound policy to deal with them.


1 Alberto Alesina, Robert J. Barro, Silvana Tenreyro (2002), “Optimal Currency Areas”, NBER Working Paper 9072, National Bureau of Economic Research.

2 Jeffrey A. Frankel and Andrew K. Rose (1998), “The Endogeneity of the Optimum Currency Area Criteria”, The Economic Journal, 1009-1025.

3 Masahiro Kawai (1993), “Optimal and Sustainable Exchange Rate Regimes: A Two-Country Game-Theoretic Approach”, IMF staff papers, 329-368.

4 Richard E. Caves, Jeffrey A. Frankel, Ronald W. Jones (2003), “World Trade and Payments: An Introduction”, Addison Wesley.

5 Robert Mundell (1961), “A Theory of Optimum Currency Areas”, American Economic Review, vol.51, 509-517.

6 Robert E. Lucas (1976), “Econometric Policy Evaluation: A Critique”, Carnegie-Rochester Conference Series on Public Policy, Amsterdam: North-Holland, 19-46.

Thursday, December 28, 2006

I Confess You

The universities I've applied to are as follows:

(1) The University of Hawaii at Manoa

(2) The University of South Carolina, Moore School of Business

(3) Binghamton University, State University of New York

(4) The University of Wisconsin-Milwaukee etc.

I' ve applied to the PhD program in economics and there wanted to pursue the study of international finance. (I will talk to you about my proposed research later.) Now my application process is going on.

I wonder if I should tell you the name of the university I applied to, but I think there is no serious problem in exposing it to you.

I think the above four universities are good at the research in the field of international economics. Their courses are small, interactive and intensive ones, and one of them has an interdisciplinary one. My graduate teacher said to me, "Good choice, Taro". I think so, too.

My God, please have them accept me!

If one of them accepts me, I will start a US graduate student's blog here.
Much of the topics on not only international society, but also on my private graduate life will be released obviously. I hope I will provide the students who think about starting the application process to the graduate school with helpful information.

A Next Economist

A new year is coming soon. Next year I will go to the US if one of the universities I've applied to accepts me.

Since I was an undergraduate student, I have wanted to go to the graduate school in the US and to study advanced economics in the classroom at US graduate school. And I want to be an economist at university or college. This is my big resolution. I am going to devote my life to the research on economics.

Now I hope I will take a ticket to the way to the econ graduate school in the US.

Everyone, have a happy new year! And thank you for having kept an eye on my blog! Next year I will try to write more on this blog. Please go and see my blog!

Friday, December 08, 2006

Never Pearl Harbor

Dec. 7 is a famous day in history. Sixty-five years ago, Japanese planes staged a surprise attack on Pearl Harbor, a U.S. naval base in Hawaii.

At school I learned the war on the U.S. had begun since the attack. Then Japan took the road to hell. Japanese soldiers dreamed a victory over the U.S., but in fact it was a tragedy that came true to them.

Isoroku Yamamoto, a Commander-in-Chief of the Imperial Japanese Navy (IJN) during the first four years of World War II, and ex-student at Harvard, commanded the attack. However, he is said to have been against the attack on the U.S. He knew the military power of the U.S., and didn't think Japan would win the U.S.

That event at Pearl Harbor reminds me of fruitlessness of war. That is the tragedy not only for the U.S. people, but also the Japanese citizens. I do not want either to justify or criticize the sudden and cruel attack on the Pearl Harbor. I just want to keep in mind that event.

Thursday, December 7, 2006
The Washington Post

The attack killed more than 2,400 Americans, including 1,177 on the USS Arizona battleship; sank or damaged 21 ships; and destroyed 188 aircraft. The next day, Dec. 8, 1941, President Franklin D. Roosevelt asked Congress to declare war on Japan. The United States had entered World War II. At Pearl Harbor, a Solemn Remembrance500 WWII Veterans Mark 65th Anniversary in Gathering That Could Be Last for ManyAssociated PressFriday, December 8, 2006.

.....PEARL HARBOR, Hawaii, Dec. 7 -- One by one, survivors from ships sunk 65 years ago Thursday in the Japanese attack on Pearl Harbor laid wreaths under life-preserver rings honoring their ships. Nearly 500 survivors bowed their heads at 7:55 a.m., the minute planes began bombing the harbor in a surprise attack that thrust the United States into World War II.

..... "America in an instant became the land of the indivisible," said former NBC Nightly News anchor Tom Brokaw, the author of "The Greatest Generation," who spoke at the shoreside ceremony. "There are so many lessons from that time for our time, none greater than the idea of one nation greater than the sum of its parts."

Many were treating the gathering as their last, uncertain whether they would be alive or healthy enough to travel to Hawaii for the next big memorial ceremony, the 70th anniversary.
"It is because of you and people like you that we have the freedoms we enjoy today," Capt. Taylor Skardon said after relating each ship's story at the end of the ceremony.

A priest gave a Hawaiian blessing and Marines performed a rifle salute. For many World War II veterans, the visit to the attack site could be their last. "Sixty-five years later, there's not too many of us left," said Don Stratton, a seaman 1st class who was aboard the USS Arizona on Dec. 7, 1941. "In another five years I'll be 89. The good Lord willing, I might be able to make it. If so, I'll probably be here. I might not even be around. Who knows? Only the good Lord knows." Stratton and other survivors were boarding a boat to the white memorial straddling the sunken hull of the Arizona, where they were going to lay wreaths in honor of the dead.

"We thank those who lost their lives 65 years ago, and we honor the survivors and their families who are with us here today," said Hawaii Gov. Linda Lingle. The Arizona sank in less than nine minutes after a 1,760-pound armor-piercing bomb struck the battleship's deck and hit its ammunition magazine, igniting flames that engulfed it. More people were killed on the Arizona that day than on any other ship. In all, 1,177 servicemen perished, or about 80 percent of the crew. Altogether, the attack killed 2,390 Americans and injured 1,178.

Twelve ships sank and nine vessels were heavily damaged. More than 320 U.S. aircraft were destroyed or heavily damaged by the time the invading planes were done sweeping over military bases from Wheeler Field to Kaneohe Naval Air Station.

......Japanese veterans who participated in the attack as navigators and pilots will also pay their respects, offering flowers at the Arizona memorial for the American and Japanese who died.
Japan lost 185 men, mostly on dive-bombers, fighters and midget submarines. Some Japanese veterans and American survivors have reconciled in the decades since. Japanese dive bomber pilot Zenji Abe has apologized to American survivors for the sudden attack, ashamed his government failed to deliver a declaration of war in time for the assault.

The Japanese aviators who carried out the attack thought the declaration had already been made by the time they started bombing, Abe has said.

That attack is not a fact but history to me. Certainly to the U.S. veterans survived from it, it is an unforgettable fact. However, to many young people like me it is mere one page of large history book.

History doesn't always tell the truth. History might tell us no tragic story of Pearl Harbor, in some day. Hence the Pearl Harbor should continue to be told and be remembered. It is because that tragedy gives us the reasons why we mustn't go to futile war. I hope no war will there be in the future.

Monday, December 04, 2006

Japan-U.S. Security Treaty Useful?

66 percent of Japanese respondents in an annual Yomiuri Shimbun-Gallup poll think the Japan-U.S. Security Treaty contributes to the stability of the Asia-Pacific region.

There has been a controversy on whether Japan should keep the security treaty with the U.S. As a high school student, I was taught that Japan-U.S. Treaty was a kind of military alliance and very dangerous to our social life.

As teachers said, Japan should throw away the Treaty because it is against the Constitution of Japan which prohibits Japan from being involved to any military actions. That's an extreme response, I think. However, it may be also an extreme that the Japan-U.S. Security Treaty saves our nation.

Is it useful? It certainly prevents the enhancement of nuclear power and contributes to the stability of the Asia-Pacific region, I guess. The following survey says:

The Yomiuri Shimbun
Dec. 2, 2006

The response was the strongest support for the treaty since the survey was switched to a telephone survey in 2000, and was up four percentage points from last year.

Specifically, people were asked "To what extent do you think the Japan-U.S. Security Treaty contributes to the security of the Asia-Pacific region?" Positive answers were divided into two responses: "Contributes greatly" and "Contributes somewhat."

Eighteen percent of respondents, down three percentage points from 2005, said the treaty was not instrumental, answering that it either "does not contribute very much" or "does not contribute at all." It was the first time that unfavorable views to the treaty were less than a combined 20 percent.

The Japanese side of the survey was conducted Nov. 17-20 with 5,000 households selected randomly to answer questions by telephone. Of the 5,000 households, 1,823 had eligible voters and 1,002 of them, or about 55 percent, gave valid answers.

On the troop strength of U.S. forces stationed in Japan, 46 percent of the respondents, up eight percentage points from 2005, said the current level should be maintained. The figure was also a record high for the survey. Thirty-five percent said the number "should be reduced," down 8 percentage points from last year.

It was the first time since the 2001 survey that "maintain the status quo" answer on regarding U.S. troop levels surpassed "should be reduced."

The record high figures are probably due to feelings that North Korea's test launch of missiles and its nuclear test pose a serious threat to Japan's security, analysts said.

To the question "If Japan were attacked by another nation, do you think the United States would or would not help Japan militarily?," 71 percent answered, "Yes, [the United States] will help," down five percentage points from the 2001 survey. Eighteen percent chose "No, [the United States] will not help."

"If Japan were to be attacked by another nation, do you think the United States would or would not help Japan militarily?"

To such the question, 71 percent answered, "Yes". Very interesting point.
Would the U.S. really save Japan? My reply is somewhat negative: The U.S. would tell us Japan to save itself by itself. Would the U.S. would retaliate against the aggressor for Japan? Does it benefit the U.S.? I don't think so. The U.S. would do just only what benefits itself, as well as any nations.

Value Diplomacy

Foreign Minister Taro Aso has unveiled what he calls the "arc of freedom and prosperity," a new foreign policy vision that will help promote democracy and economic development in Southeast and Central Asia and Eastern Europe.

The Yomiuri Shimbun
Dec. 2, 2006

.....The envisaged policy is aimed at clarifying Japan's global contribution and serving national interests, such as securing natural resources, through active assistance in these regions.
Aso said Thursday the new vision will become a pillar of diplomatic strategies of the administration of Prime Minister Shinzo Abe. "Another new core policy will be added to the basis of Japan's diplomacy, strengthening the Japan-U.S. alliance and enhancing relations with neighboring countries, including China, South Korea and Russia," Aso said at a lecture organized by the Japan Institute of International Affairs at a Tokyo hotel.

Aso said the government would:

-- Employ "value diplomacy" that emphasizes "universal values" such as democracy, freedom, human rights, rule of law and a market economy.

-- Be actively involved in establishing the arc of freedom and prosperity, which will connect a band of emerging democracies around the Eurasian continent.

Japan's assistance in the regions would include "continued support for Cambodia, Laos and Vietnam," "support for self-reliant development in Central Asia and the stabilization of Afghanistan," and the "stabilization of Georgia, Ukraine, Azerbaijan and Moldova," according to Aso.

As Aso says, Japan should deliver the "universal values" such as democracy, freedom, human rights, rule of law and a market economy to less democratic and free areas. I am for that; But this seems to be a photocopy of what the U.S. president George W. Bush pursues as a primary goal of his foreign policies. Japan should have its own original values in a foreign policy vision, for example, "Bushido" spirit, which tells us to be gentle to the poor and the weaker. * Bushido: The traditional code of the Japanese samurai, stressing honor, self-discipline, bravery, and simple living.

And he also suggests that Japan be actively involved in establishing the arc of freedom and prosperity. This is also an imitation of Bush's diplomacy. How will he persuade the countries disturbing the freedom and human rights of people like China, Russia and North Korea to promote such universal values in their countries?

I think that what he says is right. However, he should unveil rather "how" he will do next to help promote democracy and freedom in the Eurasian continent.