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Does the productivity J-curve exist in Japan?-Empirical studies based on the multiple q theory

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  • Miyagawa, Tsutomu
  • Tonogi, Konomi
  • Ishikawa, Takayuki

Abstract

Brynjolfsson, Rock, and Syverson (2021) argued that the standard TFP growth is low during an investment boom for new technology such as the IT revolution. As the new capital is operated and productivity improves, the shape of the movements in the standard productivity growth resembles a J-curve. However, when costs associated with investment for new technology are recognized as intangible investment - which is not counted in the conventional value added –, the revised TFP growth including these unmeasured intangibles show different movements from the standard TFP growth. Following Brynjolfsson, Rock, and Syverson (2021), we examine the gap between the standard TFP growth and the revised TFP growth. According to their theory, unmeasured intangibles are estimated by the gap between the shadow value and the price of investment goods. We obtain this shadow value of investment through an estimated parameter in each asset using listed firm-level data and revise the standard TFP growth rate. In the case of all industries, the standard TFP growth is overestimated in most years in the late 1990s and the 2000s, because the growth in intangible investment associated with measured investment is lower than measured capital accumulation rate. When we focus on the IT-intensive industries, we find the productivity J-curve in the late 1990s, at the early stage of the IT revolution, as indicated by Brynjolfsson, Rock and Syverson (2021).

Suggested Citation

  • Miyagawa, Tsutomu & Tonogi, Konomi & Ishikawa, Takayuki, 2021. "Does the productivity J-curve exist in Japan?-Empirical studies based on the multiple q theory," Journal of the Japanese and International Economies, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:jjieco:v:61:y:2021:i:c:s0889158321000162
    DOI: 10.1016/j.jjie.2021.101137
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    Cited by:

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    4. Parteka, Aleksandra & Kordalska, Aleksandra, 2023. "Artificial intelligence and productivity: global evidence from AI patent and bibliometric data," Technovation, Elsevier, vol. 125(C).

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    More about this item

    Keywords

    Growth accounting; Intangibles investment; Multiple q-theory; Productivity J-curve; Second solow paradox;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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