Although Bitcoin was designed as a payment vehicle and as a store of value, it seems unlikely that currencies provided by central banks are at risk of being replaced, primarily because of the market price instability of Bitcoin. We diagnose the instability as being a symptom of the lack of flexibility in the Bitcoin supply schedule - a predetermined algorithm in which the proof of work is the major driving force. This paper explores the problem of instability from the viewpoint of economics, and suggests a new monetary policy for stabilizing the values of Bitcoin and other cryptocurrencies.

Constructing an open economy Lewisian growthmodel withth ree sectors, we analyze the relationship between economic growth and the level of absolute prices. We show that the absolute price level will not increase until the economy reaches the Lewisian turning point. In addition, we show that in an economy like China, where there are strong barriers to the movement of labor to the manufacturing sector and where the ratio of net exports of goods and services to GDP is high, the economy will not reach the turning point until GDP per worker reaches a relatively high level.

Extending Milgrom and Roberts (1982), we analyze an infinite horizon entry model where an incumbent may use its current price to signal its strength, in order to deter entry. In contrast with conventional limit pricing, we show the entry of weaker firms. We also provide necessary and sufficient conditions for this phenomenon to arise in equilibrium, in the benchmark cases that no second entry is profitable.

This paper analyzes the economic consequences of performance-oriented human resource (HR) system reform at Auto Japan (pseudonym), one of the largest Japanese auto sales firms, using personnel and employee output data. The author overviews the three major components of the HR reform: base wages, performance-based pay, and performance rating systems. Then the author examines the productivity effect of the reform. The performance-based pay system was changed from combining a base wage with a simple performance pay system to a scheme kinked around a draw line (representing aggregate base pay) to strengthen incentives. The introduction of the draw formula performance-based pay system raised the productivity of the new car sales staff, but generally failed to raise the productivity of the used car sales staff. The evidence suggests that while Auto Japan's performance-oriented HR system reform, which was typical of reforms instituted among major Japanese firms in the late 1990s, changed the wage structure and grading pattern of employees, it brought only slight improvement in individual productivity.

Following Lo and MacKinlay's work on the U.S. market (1988, 1990), this paper investigates the autocorrelation of the market index and the cross-autocorrelations of size-sorted portfolios in the Japanese market. The structure of the cross-autocorrelations in the Japanese market is very similar to that of the U.S. in the sense that there are lead-lag relations running from larger stocks to smaller stocks, which will create positive autocorrelation in the market index. Although we have found no autocorrelation in the popular Japanese TOPIX market index, it is because TOPIX puts much more weight on larger stocks compared to the CRSP index for the U.S. market. However, such a cross-autocorrelation structure disappeared during the latter half of the 1990s, as the largest stocks in the Japanese market began to exhibit negative autocorrelation. The possibility of a serious financial crisis during this period provides an explanation for negative autocorrelation. Some empirical evidence is provided for this explanation.

This study investigates the determinants of companies' voluntary information disclosure. Employing a large and unique dataset on the companies' own earnings forecasts and their frequencies, we conducted an empirical analysis of the effects of a firm's ownership, board, and capital structures on information disclosure. Our findings are consistent with the hypothesis that the custom of cross-holding among companies strengthens entrenchment by managers. We also find that bank directors force managers to disclose information more frequently. In addition, our results show the borrowing ratio is positively associated with information frequency, suggesting that the manager is likely to reveal more when his or her firm borrows money from financial institutions. However, additional borrowings beyond the minimum level of effective borrowings decrease the management's disclosing incentive.

This paper is about limit pricing under complete information and endogenous market demands. If pre-entry and post-entry market demands are correlated, then limit pricing can be an equilibrium strategy under complete information without government intervention. Furthermore, with government intervention, limiting entry via government dominates self-limiting strategy for the incumbent monopolist. The entry regulation by the benevolent government to prevent excess entry is exploited by the incumbent as a way to protect monopoly position. As a result, the social welfare with entry regulation is lower than under pure market equilibrium. The idea of this paper is general enough to be applied to other dynamic models of sequential entry like a location model of product differentiation.

The paper analyzes Russia's present economic condition and shows how it has changed from the 1992-94 period. It shows that all ambitious intentions to stabilize the economy have failed to some extent due to the fact that part of revenues, which could be used for social projects, investment and other needs, disapp.eared from the economy. Such a performance contributed to the concentration of money in some sectors of the economy and social groups increasing social inequality. Nevertheless, one more time the Russian government proclaimed a new stage of economic reform in fall 1994, claiming that more rigorous fiscal and monetary policies were necessary to reduce infiation. Budgetary spendings were reduced, however it has not resulted in the targeted slow<iown of inflation. The main result of such policy was a deep fall in domestic demand. Budget shortages caused a deep fall in wages of state employees. Real disposable incomes decreased by 12 percent in January-September of 1 995. Low domestic demand may contribute to the continue of the recession period. Several attempts to achieve macroeconomic stabilization have failed in Russia since 1992. Russian economic performance of 1992-1994 has been well examined in the literature. Critical analysis of the failure of the stabilization policies has been presented in a number of studies. At the same time it seems in 1 995 as if the country is really closer to macroeconomic stabilization than ever before. Is it real of seeming signs of the stabization? What price should society pay

Carlsson and van Damme (1991, 93) presented a notion of a global game, which is an incomplete information game where the actual payoff structure is affected by a realization of a common shock and where each player gets noisy private information of the shock. For n-person symmetric games with two possible actions characterized by strategic complementarity, they showed that equilibrium play in a global game with vanishing noise is uniquely determined. The concept of global games is important not only as a theory of the most refined notion of equilibrium but also as a theory of coordination failures under private information. From this viewpoint, this paper makes the theory of global games more general and more applicable to such problems. The implications of the theory of global games are investigated in two specific models: a speculative attack model and a network externality model. It is shown that both the monetary authority in the speculative attack model and the central planner in the network externality model will prefer the equilibrium in a global game with small noise to the worst equilibrium in the corresponding complete information game. Therefore, they will welcome the existence of small noise, if they apply mini-max principle to multiple equilibrium problems.

It is now well understood how the presence of borrowing constraints can affect the time series properties of aggregate economic data. In particular the results in Scheinkman and Weiss [9] show that borrowing constraints may cause the appearance of economic fluctuations in an economy where, if the perfect risk sharing implied by a full set of contingent claims markets was available, no aggregate fluctuations would be observed. Departures from perfect risk-sharing across countries would also have several implications for the behavior ofthe international comovements ofeconomic time series. Scheinkman [8] suggested that correlation of consumption series across countries could be used to test for the presence of a full set of contingent claims markets. Also, as it is shown formally below, if the output of different countries are Pareto substitutes in consumption, in a complete markets setting, the correlation of output series should be smaller (algebraically) than that of the corresponding productivity series. In this paper we construct a formal model of a two country economy that allows us to derive implications of the presence of borrowing constraints on the behavior of economic time series. Simulations of the model reveal that it is capable of generating significant positive correlation across output series even in the presence of uncorrelated productivity shocks. This result suggests that borrowing constraints can be used to explain the substantial positive correlation of output growth across countries in the presence of almost no correlation of productivity growth series (cf. Costello [5]). Further the model can generate a much lower consumption correlation than