Productivity and the Business Cycle in Japan -Evidence from Japanese Industry Data -
AbstractConstructing thirty-seven industries database, we examines whether measured productivity in Japan is procyclical and investigates the sources of that procyclicality using the production function approach employed by Hall (1990) and Basu and Fernald (1995). At the aggregate level, the measured Solow residual shows procyclicality. Large numbers of industries show constant returns to scale. No significant evidence for the presence of thick-market externalities is found. Our results also hold when we consider labor hoarding, part-time employment, and the adjustment cost of investment. The results suggest policies to revitalize the Japanese economy should concentrate on promoting productivity growth.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 05022.
Length: 40 pages
Date of creation: Jul 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-11 (All new papers)
- NEP-EFF-2005-07-11 (Efficiency & Productivity)
- NEP-MAC-2005-07-11 (Macroeconomics)
- NEP-SEA-2005-07-11 (South East Asia)
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