2022 Fiscal Year Annual Research Report

The Mechanism and Stability of Global Imbalances

Research Project

Project/Area Number	22H00849
Allocation Type	Single-year Grants
Research Institution	Waseda University
Principal Investigator	菊地朋生早稲田大学, 国際学術院(アジア太平洋研究科), 准教授 (60906527)
Co-Investigator(Kenkyū-buntansha)	戸部智関西学院大学, 総合政策学部, 講師 (00824145)
Project Period (FY)	2022-04-01 – 2025-03-31
Keywords	superpowers / club goods / coalition formation
Outline of Annual Research Achievements	We build a game-theoretic model of two superpowers competing to attract small countries as members for their clubs. The superpowers play a two stage sequential game (Stackelberg game) of choosing an ideological location for club goods they provide. The club goods have consumption externalities, i.e., the price which each member pays depends on others who join the club as members share the cost. To model the two-way interaction between superpowers and the other countries we use a coallition formation process (core) to determine the behavior of the small countries in each stage and derive the subgame perfect Nash equilbrium of the game between the two superpowers. We simulate our game to characterize how the US and China compete for a sphere of influence.
Current Status of Research Progress	Current Status of Research Progress 2: Research has progressed on the whole more than it was originally planned. Reason We have published "Superpowers Competing for a Sphere of Influence" Tomoo Kikuchi and Shuige Liu as a working paper at https://arxiv.org/abs/2209.10206. We will present the paper at several international conferences and seminars this summer. The following papers are work in progress: 1) "Does Foreign Equity Investment Contribute to Economic Growth?" Tomoo Kikuchi, Satoshi Tobe, Duy Van Dang, and Quang Trung Nguyen; 2) "Portfolio Investment Patterns in East Asia,"Tomoo Kikuchi, Satoshi Tobe, and Changran Lee; 3) "The Role of Tax Havens for Portfolio Investment of the US and China," Tomoo Kikuchi, Satoshi Tobe, and Xiaoyu Cheng; 4) "The Exorbitant Privilege and Cross-border M&A," Tomoo Kikuchi, Satoshi Tobe, and Sinan Caner Yamak.
Strategy for Future Research Activity	We plan to submit "Superpowers Competing for a Sphere of Influence" Tomoo Kikuchi and Shuige Liu to a top journal. We plan to finalize the following papers: 1) "Does Foreign Equity Investment Contribute to Economic Growth?" Tomoo Kikuchi, Satoshi Tobe, Duy Van Dang, and Quang Trung Nguyen; 2) "Portfolio Investment Patterns in East Asia,"Tomoo Kikuchi, Satoshi Tobe, and Changran Lee; 3) "The Role of Tax Havens for Portfolio Investment of the US and China," Tomoo Kikuchi, Satoshi Tobe, and Xiaoyu Cheng; 4) "The Exorbitant Privilege and Cross-border M&A," Tomoo Kikuchi, Satoshi Tobe, and Sinan Caner Yamak.