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Capital Accumulation, Vintage and Productivity: The Japanese Experience

Author

Listed:
  • Taiji Hagiwara

    (Graduate School of Economics, Kobe University)

  • Yoichi Matsubayashi

    () (Graduate School of Economics, Kobe University)

Abstract

We empirically examine the relationship between capital accumulation and vintage as well as the productivity of industries in Japan from 1980 to 2007. Based on the empirical analyses, we confirmed that vintage exerted a significant influence on the productivity during the period of economic expansion, particularly during the economic upturn that started in 2000, where strong vintage effects were observed in all industries. The rejuvenation of capital equipment during this period clearly resulted from a strong productivity effect. In contrast, during the bubble period of the late 1980s, vintage exerted no observable effects on productivity despite significant increases in investment. This finding shows that increase of capital stock during this period was not necessarily Productive and was likely to produce a merely temporary boom. From this view, we reconfirm that the relationship between vintage and productivity changed in subtle ways in response to the phases of business cycles.

Suggested Citation

  • Taiji Hagiwara & Yoichi Matsubayashi, 2014. "Capital Accumulation, Vintage and Productivity: The Japanese Experience," Discussion Papers 1418, Graduate School of Economics, Kobe University.
  • Handle: RePEc:koe:wpaper:1418
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2014/1418.pdf
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    References listed on IDEAS

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    1. Gittleman, Maury & ten Raa, Thijs & Wolff, Edward N., 2006. "The vintage effect in TFP-growth: An analysis of the age structure of capital," Structural Change and Economic Dynamics, Elsevier, vol. 17(3), pages 306-328, September.
    2. Zvi Griliches, 1998. "Productivity and R&D at the Firm Level," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 100-133 National Bureau of Economic Research, Inc.
    3. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters,in: The Economics of an Ageing Population, chapter 2 Edward Elgar Publishing.
    4. Whelan, Karl, 2007. "Embodiment, productivity, and the age distribution of capital," Journal of Macroeconomics, Elsevier, vol. 29(4), pages 724-740, December.
    5. Plutarchos Sakellaris & Daniel J. Wilson, 2004. "Quantifying Embodied Technological Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 1-26, January.
    6. Whelan, Karl, 2003. " A Two-Sector Approach to Modeling U.S. NIPA Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(4), pages 627-656, August.
    7. Plutarchos Sakellaris, 2001. "Production function estimation with industry capacity data," Finance and Economics Discussion Series 2001-06, Board of Governors of the Federal Reserve System (U.S.).
    8. Hulten, Charles R, 1992. "Growth Accounting When Technical Change Is Embodied in Capital," American Economic Review, American Economic Association, vol. 82(4), pages 964-980, September.
    9. Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-583, August.
    10. Simon Gilchrist & John C. Williams, 2001. "Transition dynamics in vintage capital models: explaining the postwar catch-up of Germany and Japan," Finance and Economics Discussion Series 2001-07, Board of Governors of the Federal Reserve System (U.S.).
    11. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
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    1. repec:spr:jecstr:v:6:y:2017:i:1:d:10.1186_s40008-017-0090-y is not listed on IDEAS

    More about this item

    Keywords

    Vintage; productivity; Business cycle;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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