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Outline A little on the pre-1994 Japanese electoral system Implications for the theory

Comments on “Political Determinants of Government Loans in Japan” Anil Kashyap October 26, 2006  JFI/WB Conference on Bank Regulation and Corporate Finance. Outline A little on the pre-1994 Japanese electoral system Implications for the theory Interpretation. Main results….

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Outline A little on the pre-1994 Japanese electoral system Implications for the theory

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  1. Comments on “Political Determinants of Government Loans in Japan”Anil KashyapOctober 26, 2006  JFI/WB Conference on Bank Regulation and Corporate Finance • Outline • A little on the pre-1994 Japanese electoral system • Implications for the theory • Interpretation

  2. Main results…. Prefectural loans made by government financial institutions (but not by private banks) are higher when: • LDP representatives have longer tenure • LDP candidates are vulnerable to defeat

  3. Shigeo Hirano: Do Individual Representatives Influence Government Transfers: Evidence From Japan

  4. Implications and questions raised by Hirano’s work • Does the LDP or the individuals control the pork? • Party’s interests and individuals might diverge • Is using the prefecture data OK? • Maybe all that matters is the longest serving member’s clout? • What about other types of pork? • local allocation tax and national treasury disbursements

  5. Thoughts on the regressions • Plenty of well-placed concern about reverse-causality • Instruments (at the district level): parent was an elected official, is it an open seat (perhaps due to death)? • Does including fixed effects make sense here? • Is it obvious that contemporaneous pork is relevant for buying votes? ( Would like some help with the magnitudes, are they reasonable?)

  6. Some parting questions • Can you dig down and figure out which agencies were most pliant? • If the government loans were so bad, how did the private banks still lose so much money? • What was the return to using this type of bribe to buy votes?

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