Project Leader

YOSHIKAWA Hiroshi, Faculty Fellow

Sub-Leader

MATSUMOTO Kazuyuki, Faculty Fellow

Overview

The Japanese economy has broken out of its prolonged recession and embarked upon a new phase of expansion. Looking ahead over the medium to long-term, however, it will be characterized by the aging of society and declining population, and it will follow a new path of growth never experienced in modern times, making it necessary to have knowledge and policies that differ from those before. Given this situation, in our research we analyze the factors that have a significant impact on economic growth under conditions of low fertility and an aging population. Specifically, these include the microstructure of innovation, the impact of technological advances on capital investment, the land system and agricultural productivity, labor mobilization, and the determinants of the labor force participation rates of women. We will also undertake basic research relating to measurement derived from the aforementioned themes (including the reexamination of the operating ratio index and the services deflator). Through the aforementioned studies, the objective of our research project is to gain new knowledge and draw policy implications in order to develop a strategy for future growth.

Project Leader

KOBAYASHI Keiichiro, Fellow

Overview

In order to analyze the macroeconomic policy issues facing the Japanese economy it is essential to build a more policy-relevant macroeconomic model. The macro model currently in widespread use in academia is an approach to explain actual data from assumptions about sticky prices and habit formation in consumption. In our research we focus on addressing financial issues such as borrowing constraints on working capital financing (using land as collateral), in building a theoretical model to explain macroeconomic data. In addition, we analyze the relationship between changes in banks' equity capital and the productivity of the economy as a whole from both a theoretical and an empirical perspective. We also analyze themes derived from these themes (e.g. characteristics of medium to long-term economic fluctuations, the Ramsey tax problem in the event of hypothetical crises such as wars). The analytical method is primarily theoretical research, and whenever necessary we adopt such methods as (1) the building of theoretical models, (2) the use of data to conduct empirical research, and (3) case studies by such means as literature searches.

Major Research Results

RIETI Discussion Papers

• "Collateral Constraint and News-Driven Cycles (Preliminary and Incomplete)" (KOBAYASHI Keiichiro, NAKAJIMA Tomoyuki and INABA Masaru)
• "Bank Distress and Productivity of Borrowing Firms: Evidence from Japan (Preliminary and Incomplete)" (AKIYOSHI Fumio and KOBAYASHI Keiichiro)

Project Leader

MOTOHASHI Kazuyuki, Faculty Fellow

Overview

apanese companies have been investing actively in information technology (IT) since the second half of the 1990s, but it appears that the impact of this on their productivity has been limited. IT is used in a wide range of industries, and in nonmanufacturing industry in particular it is an important complement technology for realizing business innovation. In view of this, we believe that fostering the effective use of IT will have a major impact on trends in total factor productivity at the macro level. In this research we make comparisons with the United States and certain Asian countries, making comprehensive empirical analyses from both macro and micro perspectives, including from an international standpoint, in order to address the questions of whether the use of IT by Japanese companies is being conducted effectively, what the causes are if that is not the case, and what policy methods are conceivable for promoting the effective use of IT in the future.

Major Research Results

RIETI Discussion Papers

• "Centralization or Decentralization of Decision Rights? Impact on IT Performance of Firms" (KANAMORI Takahito and MOTOHASHI Kazuyuki)
• "Information Technology and Economic Growth: Comparison between Japan and Korea" (KANAMORI Takahito and MOTOHASHI Kazuyuki)

Project Leader

HIGUCHI Yoshio, Faculty Fellow

Overview

Declining fertility and aging of society in Japan are advancing at an unprecedentedly rapid pace in comparison with other countries, with the result that the country is clearly entering an era of labor shortages. As a measure to compensate for the shortage of labor, women's entry into the labor force is being required to a greater extent than before. On the other hand it is believed by some that the increase in the female employment rate will cause the fertility rate to fall still further, and that the resultant population decline will impede economic growth in the long run. To counter that prospect, policies have been implemented to enable the fertility rate to rise and at the same time women to continue in employment, for example through the development of a system of child care leave. However, it is not yet safe to say that the results of these measures have been verified empirically. Accordingly, in our research we (1) analyze the factors behind the decline in the fertility rate, and study how great an impact institutional changes such as the introduction of the child care-leave and other such schemes has been having, and (2) analyze factors that impede the continuation of women's participation in the work force, and study what kind of institutional design is required.

Major Research Results

RIETI Discussion Papers

• "Empirical Analysis of Fertility Rates - Focus on its relationship with the state of economic activity and family policy" (TODA Akihito)
• "Impact of Regional Factors on Births and Wives' Continuation in Employment - Panel survey of consumers by the Institute for Research on Household Economics" (HIGUCHI Yoshio, MATSUURA Toshiyuki, and SATO Kazuma)

Project Leader

SHIMIZUTANI Satoshi, Faculty Fellow

Overview

As Japan experiences the aging of its society at a pace unprecedented worldwide, it is essential to build a sustainable social security system that ensures that the elderly do not suffer a decline in quality of life. Our research transcends the bounds of the traditional field-specific approach that addresses the health care, long-term care, and pension fields separately, and of simulation analysis with the use of macro models, and instead adopts a "new" microscopic yet comprehensive, market-oriented approach that is premised on the diversity of the elderly. Based on pilot studies already conducted as a research project in fiscal 2005, and with the intellectual support of the analogous studies of the elderly (the U.S. HRS [Health and Retirement Study], ELSA [English Longitudinal Study of Ageing] in the UK, and SHARE [Survey of Health, Ageing and Retirement in Europe] in Continental Europe), our research has inaugurated a world-standard panel study on population aged over 50. We are gathering data that is both multi-faceted, covering such aspects as health condition, economic situation, family relationships, employment status, and social participation, and that is also capable of international comparison. Our intention in doing this is to help ensure that "evidence-based policy-making" based on an abundance of microdata becomes an established feature in the sphere of social security policy in Japan, and that Japan's experience can be taken advantage of by other countries in their policy-making.

Major Research Results

RIETI Discussion Papers

• "Analysis of the Survey Response Behavior: An Experience from a Pilot Survey of the Health and Living Status of the 50s and beyond in Japan" (ICHIMURA Hidehiko, KAWAGUCHI Daiji and SHIMIZUANI Satoshi)

International Workshop

• "Conference on Japanese version of HRS/ELSA/SHARE" (Aug 4-5, 2006 and Sep 19, 2006)

Project Leader

FUKAO Mitsuhiro, Faculty Fellow

Sub-Leader

NAKATA Daigo, Fellow

Overview

The rapid aging of the Japanese population will increase the burden of social security finance in the future, and this is a cause for concern with regard to the maintenance of Japan's economic vitality. In order to forecast the future burden of social security finance and the future benefits, it is essential to build a simulation model for social security finance that accurately reflects Japan's social security system. Accordingly, in our research we focus on pension finance analysis using a pension simulation model previously developed at RIETI, while also conducting analyses in other social security fields. In this way we will build a simulation model to make possible the comprehensive analysis of pension, health care, nursery care, and welfare finance, and study the desirable forms of the benefits and the burden of a social security system that is compatible with economic vitality in a society characterized by a declining fertility rate and aging population.