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U.S. R&D and Japanese Medium Term Cycles

Author

Listed:
  • R. Anton Braun

    (University of Tokyo)

  • Toshihiro Okada

    (Kwansei Gakuin University)

  • Nao Sudou

    (Bank of Japan)

Abstract

In the thirty year period between 1960 and 1990 Japan saw labor productivity rise from a level of 27 percent of the U.S. to 87 percent of the U.S. This development miracle can be explained by an initial low capital stock and measured variations in TFP. These facts motivate our investigation into the sources of Japanese TFP variations. We consider Japanese and U.S. data that is filtered to retain medium cycle events such as the productivity slow down in the 1970's. An investigation of Japanese medium cycles reveals an important role for the diffusion of business ideas from the U.S. to Japan. U.S. R&D leads Japanese TFP by four years and accounts for as much as 60% of the variation in medium term cycle Japanese TFP. Japanese R&D, in contrast, is coincident with Japanese TFP. Simulations designed to isolate the roles of Japanese and U.S. R&D suggest that the diffusion of knowledge from the U.S. is a key driver of Japanese medium cycles. Interestingly, our theory also accounts for Japan's experience in the 1990s. Slow growth during this period was preceded by a sharp and persistent decline in U.S. R&D.

Suggested Citation

  • R. Anton Braun & Toshihiro Okada & Nao Sudou, 2006. "U.S. R&D and Japanese Medium Term Cycles," Bank of Japan Working Paper Series 06-E-6, Bank of Japan.
  • Handle: RePEc:boj:bojwps:06-e-6
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    References listed on IDEAS

    as
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    Cited by:

    1. Fumio Hayashi & Edward C. Prescott, 2008. "The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 573-632, August.
    2. R. Anton Braun & Daisuke Ikeda & Douglas H. Joines, 2009. "The Saving Rate In Japan: Why It Has Fallen And Why It Will Remain Low," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 291-321, February.
    3. Otsu Keisuke, 2009. "A Neoclassical Analysis of the Postwar Japanese Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-30, May.
    4. Anton Braun, R. & Esteban-Pretel, Julen & Okada, Toshihiro & Sudou, Nao, 2006. "A comparison of the Japanese and U.S. business cycles," Japan and the World Economy, Elsevier, vol. 18(4), pages 441-463, December.
    5. R. Anton Braun & Yuichiro Waki, 2006. "Reply," The Japanese Economic Review, Japanese Economic Association, vol. 57(2), pages 358-359, June.
    6. Kosaka Michiru Sakane, 2013. "News-driven international business cycles," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-43, May.
    7. R. Anton Braun & Tomoyuki Nakajima, 2009. "Pareto Optimal Pro-cyclical Research and Development," CIRJE F-Series CIRJE-F-617, CIRJE, Faculty of Economics, University of Tokyo.
    8. Toshihiro Okada, 2018. "International R&D Spillovers, Innovation by Learning from Abroad and Medium-Run Fluctuations," Discussion Paper Series 183, School of Economics, Kwansei Gakuin University.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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