Project Leader

YOSHIKAWA Hiroshi, Faculty Fellow

Sub-Leader

OKAZAKI Tetsuji, Faculty Fellow

Overview

To maintain Japan's economic vitality in the face of declining fertility and aging population, it will be necessary to undertake comprehensive research on improving productivity and promoting technological innovation. Based on a keen awareness of such policy issues, this project is to analyze the mechanisms of economic growth from various angles. While existing studies of economic growth tend to be centered on total factor productivity (TFP), this project will take in a broader range of themes from both experimental and peripheral studies. The project will also research the role of product innovation, an area with few prior empirical studies.

Major Research Results

RIETI Discussion Papers

• "Non-Self-Averaging in Macroeconomic Models: A Criticism of Modern Micro-founded Macroeconomics" (AOKI Masanao and YOSHIKAWA Hiroshi)

Project Leader

KOBAYASHI Keiichiro, Fellow

Overview

The purpose of this project is to create a quantitative business-cycle model (macroeconomic model) to analyze developments in the Japanese economy and developments in the U.S. economy as it is impacted by the subprime loans problem, and to use the model to run simulations to evaluate macroeconomic policies. In particular, the project will focus on the impact of news shocks (news and expectations pertaining to future economic conditions) on business conditions, and on changes in business conditions under the assumption that the economy can converge toward an infinite number of stable equilibriums. In this context, we will further refine the Business Cycle Accounting (BCA) methodology that we have been working on since fiscal 2005. Furthermore, we shall examine the policy responses needed to normalize the economic system in the event of a military emergency and other crises. This will be based on the analysis of case studies gathered from various countries and a number of hypothetical scenarios.

Major Research Results

RIETI Discussion Papers

• "Emissions Standard System: A monetary regime for provision of global public goods" (KOBAYASHI Keiichiro)
• "Banking Crisis and Borrower Productivity" (KOBAYASHI Keiichiro and YANAGAWA Noriyuki)
• "Collateralized capital and News-driven cycles" (KOBAYASHI Keiichiro and NUTAHARA Kengo)
• "Business Cycle Accounting for the Japanese Economy Using the Parameterized Expectations Algorithm" (INABA Masaru)
• "Debt-Ridden Equilibria - A Simple Theory of Great Depressions - (Incomplete and Preliminary)" (KOBAYASHI Keiichiro and INABA Masaru)

Project Leader

MOTOHASHI Kazuyuki, Faculty Fellow

Sub-Leader

MATSUURA Toshiyuki, Fellow

Overview

Although Japanese firms have actively invested in information technologies (IT) since the second half of the 1990s, it is said these investments have had limited impact on productivity. IT is utilized in a broad range of industries and serves as a critical complementary technology in realizing business innovations in the non-manufacturing sector. Hence, promoting the effective use of IT can have an important impact on TFP on the macro level. The purpose of this project is to undertake international comparison and analysis of the status of IT innovation and its impact on productivity. What are the determinants of productivity in Japan's electronic and software industries? Are Japanese firms failing to make effective use of IT? If so, what are the causes of this failure? In this project, we address these questions by conducting comprehensive macro and micro empirical analysis.

Major Research Results

RIETI Discussion Papers

• "IT Management of Chinese Firms: Quantitative Analysis by Using Survey Data" (Xiaoyang FENG and MOTOHASHI Kazuyuki)
• "Comparative Analysis of IT Management and Productivity between Japanese and U.S. Firms" (MOTOHASHI Kazuyuki)
• "A Comparative Analysis of Japanese, U.S., and Korean Firms on IT and Management" (MOTOHASHI Kazuyuki)
• "Empirical Analysis of Industrial Structure and Productivity of the Japanese Software Industry" (MINETAKI Kazunori and MOTOHASHI Kazuyuki)
• "Impact of Machinery-manufacturing Industry on Globalization and Productivity" (MATSUURA Toshiyuki, MOTOHASHI Kazuyuki and FUJISAWA Mihoko)

Project Leader

ICHIMURA Hidehiko, Faculty Fellow

Sub-Leader

SHIMIZUTANI Satoshi, Consulting 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.

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.

Major Research Results

RIETI Discussion Papers

• "Empirical Analysis of Industrial Structure and Productivity of the Japanese Software Industry" (MINETAKI Kazunori and MOTOHASHI Kazuyuki)
• "Declining Fertility and Aging of Society, Lifecycle, and Public Pension Finance" (FUKAO Mitsuhiro, HASUMI Ryo, and NAKATA Daigo)

Project Leader

NAKAJIMA Tomoyuki, Faculty Fellow

Overview

Two types of risks exist in the economy. One is aggregate risk, which affects the entire economy, and the other is idiosyncratic risk that individual economic agents face. Because they can be fully insured, idiosyncratic risks do not pose a problem in the perfect financial market. However, in imperfect financial markets, idiosyncratic risks are significant factors that have to be taken into account in macroeconomic policies. The so-called "disparity problem" can be viewed as an issue generated by idiosyncratic risks in imperfect financial markets. The purpose of this project is to undertake theoretical and quantitative analysis of desirable macroeconomic policies in an environment where idiosyncratic risks exist.

Major Research Results

RIETI Discussion Papers

• "A Way to Resolve the Gender Inequality in Wage: Economic irrationality of statistical discrimination" (YAMAGUCHI Kazuo)

Policy Symposium

• "Work-Life Balance and Gender Equality"