- Feb. 19, 2018
- Feb. 7, 2018
- Jan. 31, 2018
Home > Research and Studies > Bank of Japan Working Paper Series, Review Series, and Research Laboratory Series > Bank of Japan Working Paper Series 2006 > U.S. R&D and Japanese Medium Term Cycles
R. Anton Braun*1
Click on wp06e06.pdf to download the full text.
In the thirty year period between 1960 and 1990 Japan saw labor productivity rise from a level of 27 percent of the U.S. to 87 percent of the U.S. This development miracle can be explained by an initial low capital stock and measured variations in TFP. These facts motivate our investigation into the sources of Japanese TFP variations. We consider Japanese and U.S. data that is filtered to retain medium cycle events such as the productivity slow down in the 1970's. An investigation of Japanese medium cycles reveals an important role for the diffusion of business ideas from the U.S. to Japan. U.S. R&D leads Japanese TFP by four years and accounts for as much as 60% of the variation in medium term cycle Japanese TFP. Japanese R&D, in contrast, is coincident with Japanese TFP. Simulations designed to isolate the roles of Japanese and U.S. R&D suggest that the diffusion of knowledge from the U.S. is a key driver of Japanese medium cycles. Interestingly, our theory also accounts for Japan's experience in the 1990s. Slow growth during this period was preceded by a sharp and persistent decline in U.S. R&D.
We wish to thank discussants and participants at theconference on the "Long-term stagnation of the Japanese economy sincethe 1990s," cohosted by the Bank of Japan and University of Tokyo andthe 2005 NBER/CIRJE/EIJS Japan project meetings for their comments.We have also received helpful comments from seminar participants atthe Federal Reserve Bank of San Francisco, the University of CaliforniaSanta Barbara, the University of Southern California and the University ofTokyo. Finally, we wish to give a special thanks to Jonathan Eaton for hisconstructive suggestions.
Papers in the Bank of Japan Working Paper Series are circulated in order to stimulate discussionand comments. Views expressed are those of authors and do not necessarily reflect those of the Bank.
If you have any comment or question on the working paper series, please contact each author.
When making a copy or reproduction of the content for commercial purposes, please contact the Public Relations Department (email@example.com) at the Bank in advance to request permission. When making a copy or reproduction, the source, Bank of Japan Working Paper Series, should explicitly be credited.