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Economic Growth Analysis of Japan by Dynamic General Equilibrium Model with R&D Investment

Author

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  • Akiyuki Tonogi

    (Faculty of Economics, Toyo University)

Abstract

The purpose of this study is to evaluate the role of R&D capital stock in Japan fs economic growth and consider the effects of science and technology policies, including public R&D expenditures, on the economic growth based on a general equilibrium dynamic model incorporating the nature of R&D capital as a public good. After developing data of R&D capital investment and capital stock and arranging SNA data on the basis of 2008SNA, we develop a numerical model by estimating or calibrating the structural parameters of a twosector dynamic general equilibrium model. A growth account using the production function of final goods production and R&D production shows that the TFP growth rates of both final goods production and R&D production have declined since the 1990s. As a result of a policy simulation incorporating the role of the spillover effects of public R&D into the model, it is found that an increase in public R&D investment significantly increases not only R&D production but also final goods production and household consumption.

Suggested Citation

  • Akiyuki Tonogi, 2017. "Economic Growth Analysis of Japan by Dynamic General Equilibrium Model with R&D Investment," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 13(3), pages 207-240, November.
    • Handle: RePEc:mof:journl:ppr13_03_01
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    References listed on IDEAS

    as
    1. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters, in: Paolo Onofri (ed.), The Economics of an Ageing Population, chapter 2, Edward Elgar Publishing.
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    3. Hiroki Arato & Katsunori Yamada, 2012. "Japan's Intangible Capital and Valuation of Corporations in a Neoclassical Framework," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(4), pages 459-478, October.
    4. Kobayashi, Keiichiro & Inaba, Masaru, 2006. "Business cycle accounting for the Japanese economy," Japan and the World Economy, Elsevier, vol. 18(4), pages 418-440, December.
    5. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    6. Ellen R. McGrattan & Edward C. Prescott, 2010. "Unmeasured Investment and the Puzzling US Boom in the 1990s," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 88-123, October.
    7. Tsutomu Miyagawa & Shoichi Hisa, 2013. "Estimates Of Intangible Investment By Industry And Productivity Growth In Japan," The Japanese Economic Review, Japanese Economic Association, vol. 64(1), pages 42-72, March.
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    Cited by:

    1. Rosa Ferrentino & Luca Vota, 2022. "An Analysis of the Effectiveness of Japanese Monetary Policy Through a Statistical Mathematical Approach: a Simultaneous Equations Model (SEM)," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 11(1), pages 1-2.

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    More about this item

    Keywords

    Research and Development Investment; Dynamic General Equilibrium Model; Growth Accounting; Policy Simulation;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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