Abstract
This paper attempts to reconcile the controversy regarding Japan's total factor productivity during its slump in the 1990s by clarifying the role of capital utilization. Hayashi and Prescott (2002) emphasized that the decline in the exogenous total factor productivity growth rate was the main cause. However, some empirical studies have also pointed out that the fall in capital utilization rates accounted for a large part of the decline in the total factor productivity growth rate. In this study we incorporate variable capital utilization into a neoclassical growth model, calculate total factor productivity taking into account capital utilization, and simulate the aggregate output and capital-output ratio. We found that although our total factor productivity growth rate in the 1990s is consistent with empirical studies, our simulation can explain the observed data. This result indicates the importance of capital utilization rates as a source of propagation during Japan's depression.
| Original language | English |
|---|---|
| Pages (from-to) | 246-253 |
| Number of pages | 8 |
| Journal | Japan and the World Economy |
| Volume | 24 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - Dec 1 2012 |
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All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics
- Political Science and International Relations
Cite this
Capital utilization in Japan's lost decade : A neoclassical interpretation. / Miyazawa, Kensuke.
In: Japan and the World Economy, Vol. 24, No. 4, 01.12.2012, p. 246-253.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Capital utilization in Japan's lost decade
T2 - A neoclassical interpretation
AU - Miyazawa, Kensuke
PY - 2012/12/1
Y1 - 2012/12/1
N2 - This paper attempts to reconcile the controversy regarding Japan's total factor productivity during its slump in the 1990s by clarifying the role of capital utilization. Hayashi and Prescott (2002) emphasized that the decline in the exogenous total factor productivity growth rate was the main cause. However, some empirical studies have also pointed out that the fall in capital utilization rates accounted for a large part of the decline in the total factor productivity growth rate. In this study we incorporate variable capital utilization into a neoclassical growth model, calculate total factor productivity taking into account capital utilization, and simulate the aggregate output and capital-output ratio. We found that although our total factor productivity growth rate in the 1990s is consistent with empirical studies, our simulation can explain the observed data. This result indicates the importance of capital utilization rates as a source of propagation during Japan's depression.
AB - This paper attempts to reconcile the controversy regarding Japan's total factor productivity during its slump in the 1990s by clarifying the role of capital utilization. Hayashi and Prescott (2002) emphasized that the decline in the exogenous total factor productivity growth rate was the main cause. However, some empirical studies have also pointed out that the fall in capital utilization rates accounted for a large part of the decline in the total factor productivity growth rate. In this study we incorporate variable capital utilization into a neoclassical growth model, calculate total factor productivity taking into account capital utilization, and simulate the aggregate output and capital-output ratio. We found that although our total factor productivity growth rate in the 1990s is consistent with empirical studies, our simulation can explain the observed data. This result indicates the importance of capital utilization rates as a source of propagation during Japan's depression.
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UR - http://www.scopus.com/inward/citedby.url?scp=84869045434&partnerID=8YFLogxK
U2 - 10.1016/j.japwor.2012.07.002
DO - 10.1016/j.japwor.2012.07.002
M3 - Article
VL - 24
SP - 246
EP - 253
JO - Japan and the World Economy
JF - Japan and the World Economy
SN - 0922-1425
IS - 4
ER -