Since the burst of the bubble economy in the early 1990s, the growth rate of the Japanese economy has not been increasing, and it is said that productivity continues to decline. Recently, a number of researchers investigated what occurred during the period. The government also attempts to answer the question in the quest for an effective policy to increase GDP growth. In empirical works, Total Factor Productivity (TFP) is commonly used as a measure of productivity. Specifically, we apply the Cobb-Douglas/Translog production function and OLS method. However, some researchers have pointed out that there can exist an endogeneity problem in OLS and have also estimated that TFP includes the demand shock through the price of products. These problems may lead to incorrect implications when we attempt to find the reason or reasons for fluctuations in the economy using the estimated TFP. In our project, we would like to decompose the effects of productivity and demand shock on economic growth. Our project consists of three topics: 1. measuring productivity in the manufacturing industry, 2. measuring productivity in the service industry and 3. finding the factor on regional heterogeneity of the total fertility rate. The first topic and the second topic should provide us with knowledge for attempting to achieve sustainable growth given the aging of society and the low birthrate in Japan. We expect the third topic to help shed light on addressing the issues of the aging society and low birthrate.
April 19, 2011 - March 31, 2013