| Abstract |
Abstract (1): We build a game-theoretical model to analyze the strategic competition between two providers of global currencies. The providers sequentially decide the effort level to facilitate the usage of their currencies, while users - interconnected in a network - determine the usage of each currency to settle their trade. Theoretical findings highlight the advantage held by the status-quo power to maintain a dominant global currency and the impact of network structures on the behavior of users and providers. Simulation results shed light on why the usage of RMB is still limited although China has become dominant in international trade.
//
Abstract (2): I analyze the 2019 consumption tax reform in Japan using a heterogeneous agent model. The model incorporates Stone–Geary preferences to replicate Japanese households' consumption expenditure patterns and accounts for national living costs. The welfare analysis reveals that the 2019 consumption tax reform reduces social welfare. An alternative policy, where the government subsidizes food and beverages while balancing the budget with a higher consumption tax rate on other goods, improves welfare outcomes. My model suggests that the welfare consequences of the consumption tax reforms stem from a trade-off between aggregate improvements and redistribution effects. In a robustness check, I extend the model to include Public Assistance and find that the trade-off remains significant. |