The goal of this project is to evaluate the international price competitiveness and the productivity gaps for the evaluation of Japan's growth strategy, based on our new benchmark estimates of industry-level price differentials between Japan and the United States. The constructed system of purchasing power parities (PPPs), which was developed in our previous project at RIETI from 2013-2015, covers not only the products for final demands, but also those for intermediate demands, using a detailed classification of 174 products (Nomura and Miyagawa, 2015), based on the expanded system of the 2005 Japan-U.S. international input-output table. Jorgenson, Nomura and Samuels (2015) developed the PPPs for capital service by type of asset (including land and inventories) and labor services by type of worker and measured the total factor productivity (TFP) gaps by 35 industries. In considering the policy challenges that Japan confronts at present, our measurement will focus on the international partial-productivity differentials at the more detailed level of industries, in particular, energy and wholesale/retail productivity. These are key opportunities for closing the productivity gap between Japan and the United States.
June 1, 2015 - March 31, 2017