Development of a Japanese AGE model for Analysis of Regulatory Reform (in Japanese)

Kanemi Ban, Sigeru Ohtsubo, Minoru Ono, Mantarou Matsuya and Shinichi Yamaguchi

Economic Analysis, 2000, vol. 159, 3-135

Abstract: Economic structural reform such as deregulation is one important policy for the Japanese economy. Throughout the 1990s, when economic growth had slowed down, various industries began to look for ways to correct the expensive nature of their cost structures and to seek new business opportunities in the domestic market. The government continues to encourage regulatory reform by such means as the Deregulation Action Program. For these government policies, it is essential to grasp quantitatively the effects of various measures on the economy and to present them clearly to the public in order to deepen the awareness and understanding of the people. In considering the economic effects of regulatory reform, one must look at the effects in individual industries. However, it is quite possible that changes in one market influence other markets through changes in relative prices and in the distribution of the primary factors. Hence, to understand the effects on the entire economy, one must also look at the influence on other markets. Our research has begun with this concept - an attempt to measure the economic effects of regulatory reform by using some kind of AGE models capable of reflecting these phenomena. In this paper, the main purpose is to provide an analytical tool that can be used to analyze regulatory reform; that is, to construct such an AGE model and to show its usability. In the process of developing a new Japanese model, we took the following three points into consideration: (1) encompassing the industries targeted for regulatory reform in Japan; (2) corresponding to the analysis with the GTAP model, which is used as a global model to examine the ripple effects in other regions; and (3) simulating the phenomena resulting from regulatory reform as much as possible. As a result of these considerations, we developed a new model for Japan based on Australia's ORANl-G model. By using this model, we tried some simulations on changes in industrial activities, changes in consumer behavior, and changes in the labor market.

Date: 2000
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