IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/19026.html
   My bibliography  Save this paper

Missing Growth in the Lost Decade

Author

Listed:
  • Naomi KODAMA
  • Huiyu LI

Abstract

Standard measurement often impute innovation from creative destruction and new varieties using surviving products. This can lead to an understatement of growth, if surviving products improve less than creatively destroyed products and new varieties. This paper estimates this bias for Japan using establishment-level data from the Japanese Census which covers all private businesses. We find that the correction increases Japan's productivity growth by 0.39 percentage points per year between 1997 and 2009 with most of the missing growth coming from non-manufacturing industries. As this bias is smaller than the bias found for the U.S., our results imply 0.23 percentage points per year bigger difference between productivity growth rates in the U.S. and Japan. The larger difference mostly stems from a larger difference in productivity growth rates for non-manufacturing industries.

Suggested Citation

  • Naomi KODAMA & Huiyu LI, 2019. "Missing Growth in the Lost Decade," Discussion papers 19026, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:19026
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/19e026.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philippe Aghion & Antonin Bergeaud & Timo Boppart & Peter J. Klenow & Huiyu Li, 2019. "Missing Growth from Creative Destruction," American Economic Review, American Economic Association, vol. 109(8), pages 2795-2822, August.
    2. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    3. Philippe Aghion & Antonin Bergeaud & Timo Boppart & Simon Bunel, 2018. "Firm Dynamics and Growth Measurement in France," Journal of the European Economic Association, European Economic Association, vol. 16(4), pages 933-956.
    4. Kyoji Fukao & Hyeog Ug Kwon, 2006. "Why Did Japan'S Tfp Growth Slow Down In The Lost Decade? An Empirical Analysis Based On Firm‐Level Data Of Manufacturing Firms," The Japanese Economic Review, Japanese Economic Association, vol. 57(2), pages 195-228, June.
    5. Dale Jorgenson & Koji Nomura, 2007. "The Industry Origins of the US-Japan Productivity Gap," Economic Systems Research, Taylor & Francis Journals, vol. 19(3), pages 315-341.
    6. Abe, Naohito & 阿部, 修人 & Fukao, Kyoji & 深尾, 京司 & Ikeuchi, Kenta & Rao, D.S. Prasada, 2018. "Quantifying and Accounting for Quality Differences in Services in International Price Comparisons: A Bilateral Price Comparison between United States and Japan," SSPJ Discussion Paper Series DP18-006, Service Sector Productivity in Japan: Determinants and Policies, Institute of Economic Research, Hitotsubashi University.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    2. Anttila, Juho, 2018. "Missing Growth in Finland," ETLA Working Papers 60, The Research Institute of the Finnish Economy.
    3. David R Baqaee & Ariel Burstein, 2023. "Welfare and Output With Income Effects and Taste Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(2), pages 769-834.
    4. Hamano, Masashige, 2022. "International risk sharing with heterogeneous firms," Journal of International Money and Finance, Elsevier, vol. 120(C).
    5. Tomoyuki Yagi & Kakuho Furukawa & Jouchi Nakajima, 2022. "Productivity Trends in Japan - Reviewing Recent Facts and the Prospects for the Post-COVID-19 Era -," Bank of Japan Working Paper Series 22-E-10, Bank of Japan.
    6. Evguenia Bessonova & Anna Tsvetkova, 2019. "Productivity convergence trends within Russian industries: firm-level evidence," Bank of Russia Working Paper Series wps51, Bank of Russia.
    7. Colin J. Hottman & Ryan Monarch, 2018. "Estimating Unequal Gains across U.S. Consumers with Supplier Trade Data," Working Papers 18-04, Center for Economic Studies, U.S. Census Bureau.
    8. Masashige Hamano, 2013. "On business cycles of variety and quality," DEM Discussion Paper Series 13-21, Department of Economics at the University of Luxembourg.
    9. Diewert, Erwin & FOX, Kevin J. Fox & SCHREYER, Paul, 2017. "The Digital Economy, New Products and Consumer Welfare," Microeconomics.ca working papers erwin_diewert-2017-12, Vancouver School of Economics, revised 14 Dec 2017.
    10. Thomas von Brasch & Arvid Raknerud, 2022. "The impact of new varieties on aggregate productivity growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(3), pages 646-676, July.
    11. Lorraine Aeberhardt & Florian Hatier & Marie Leclair & Benoît Pentinat & Jean-Denis Zafar, 2020. "Does the Digital Economy Distort the Volume-Price Split of GDP? The French Experience," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 517-518-5, pages 139-156.
    12. Masashige Hamano, 2017. "Missing Risk Sharing from International Transmission through Product Quality and Variety," DEM Discussion Paper Series 17-17, Department of Economics at the University of Luxembourg.
    13. Akira Kohsaka & Jun-ichi Shinkai, 2013. "It's Not Structural Change, but Domestic Demand: Productivity Growth in Japan," OSIPP Discussion Paper 13E005, Osaka School of International Public Policy, Osaka University.
    14. Laurien Gilbert, 2018. "Gains from Product Variety and the Local Business Cycle," 2018 Meeting Papers 46, Society for Economic Dynamics.
    15. Aum, Sangmin, 2024. "Missing growth and economic fluctuations: Empirical evidence from Korea," Journal of Economic Dynamics and Control, Elsevier, vol. 164(C).
    16. Masashige Hamano & Francesco Zanetti, 2018. "On Quality and Variety Bias in Aggregate Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(6), pages 1343-1363, September.
    17. Consolo, Agostino & Cette, Gilbert & Bergeaud, Antonin & Labhard, Vincent & Osbat, Chiara & Kosekova, Stanimira & Anyfantaki, Sofia & Basso, Gaetano & Basso, Henrique & Bobeica, Elena & Ciapanna, Eman, 2021. "Digitalisation: channels, impacts and implications for monetary policy in the euro area," Occasional Paper Series 266, European Central Bank.
    18. Robert C. Feenstra & Deng-Shing Huang & Gary G. Hamilton, 1997. "Business Groups and Trade in East Asia: Part 1, Networked Equilibria," NBER Working Papers 5886, National Bureau of Economic Research, Inc.
    19. Agnès Bénassy‐Quéré & Lionel Fontagné & Horst Raff, 2011. "Exchange‐rate Misalignments in Duopoly: The Case of Airbus and Boeing," The World Economy, Wiley Blackwell, vol. 34(4), pages 623-641, April.
    20. Geoffrey Barrows & Hélène Ollivier & Ariell Reshef, 2023. "Production Function Estimation with Multi-Destination Firms," CESifo Working Paper Series 10716, CESifo.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:19026. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.