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Returns to scale: concept, estimation and analysis of Japan's turbulent 1964-88 economy

Author

Listed:
  • W. Erwin Diewert
  • Takanobu Nakajima
  • Alice Nakamura
  • Emi Nakamura
  • Masao Nakamura

Abstract

There is policy interest in factoring productivity growth into technical progress and returns to scale components. Our approach uses exact index number methods to reduce the parameters that must be estimated, and allows us to exploit the cross-sectional dimension of plant-level panel data. We show that the same equation can also be used to estimate `Harberger' scale economies and technical progress indicators that require fewer assumptions. Estimates of the elasticity of scale for Japanese establishments in three major industries over 1964-88 are presented. Our study spans the high growth era of the 1960s, two oil shocks, and other exogenous shocks.

Suggested Citation

  • W. Erwin Diewert & Takanobu Nakajima & Alice Nakamura & Emi Nakamura & Masao Nakamura, 2011. "Returns to scale: concept, estimation and analysis of Japan's turbulent 1964-88 economy," Canadian Journal of Economics, Canadian Economics Association, vol. 44(2), pages 451-485, May.
  • Handle: RePEc:cje:issued:v:44:y:2011:i:2:p:451-485
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    Cited by:

    1. Hien Thu Pham & Shino Takayama, 2017. "Revisiting the “Missing Middle†: Productivity Analysis," Discussion Papers Series 580, School of Economics, University of Queensland, Australia.
    2. Bert Balk & Rolf Färe & Giannis Karagiannis, 2015. "On directional scale elasticities," Journal of Productivity Analysis, Springer, vol. 43(1), pages 99-104, February.
    3. Hien Thu Pham & Shino Takayama, 2017. "Firm Size Distribution, Production Efficiency, and Returns to Scale: A Stochastic Frontier Approach," Discussion Papers Series 581, School of Economics, University of Queensland, Australia.

    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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