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This paper estimates and analyzes the reaction function of Japanese intervention in the foreign exchange (Forex) markets, using daily Japanese intervention data from April 1, 1991 to December 31, 2002. A theoretical friction model is adopted to describe the intervention as cost-minimizing behavior. An ordered probit model, consistent with the theoretical model, is employed to estimate authorities' reaction function. A noise-to-signal ratio is applied in selecting the optimal cutoff point in estimated ordered probit function. Major findings are as follows: (1) A regime change in June 1995 from small-scale frequent interventions to large-scale infrequent interventions is detected; (2) the optimum cutoff is higher in the first half than the second half.

Japan’s government has taken a number of measures, including declaring a state of emergency, to combat the spread COVID-19. We examine the mechanisms through which the government’s policies have led to changes in people’s behavior. Using smartphone location data, we construct a daily prefecture-level stay-at-home measure to identify the following two effects: (1) the effect that citizens refrained from going out in line with the government’s request, and (2) the effect that government announcements reinforced awareness with regard to the seriousness of the pandemic and people voluntarily refrained from going out. Our main findings are as follows. First, the declaration of the state of emergency reduced the number of people leaving their homes by 8.5% through the first channel, which is of the same order of magnitude as the estimates obtained for lockdowns in the United States. Second, a 1% increase in new infections in a prefecture reduces people’s outings in that prefecture by 0.027%. Third, the government’s requests are responsible for about one quarter of the decrease in outings in Tokyo, while the remaining three quarters are the result of citizens obtaining new information through government announcements and the daily release of the number of infections. The findings suggest that what mattered for containing the spread of COVID-19 was not strong, legally binding measures but the provision of appropriate information that encouraged people to change their behavior.