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Estimating Japan's Gross Domestic Income Based on Taxation Data

December 7, 2016
Hiroyuki Fujiwara*1
Yasutaka Ogawa*2

Abstract

In this paper, we develop a novel approach to estimate Japan's Gross Domestic Income (GDI) based on comprehensive taxation data. In the current National Accounts statistics in Japan, GDI is calculated so that its level is equal to that of Gross Domestic Product (GDP) by adjusting operating surplus and mixed income as a balancing item. The national accounting identity dictates that GDI should be equal to GDP and also Gross Domestic Expenditure (GDE). However, in reality, as in the case of the United States where GDI is estimated using taxation data, this identity may not hold because of differences in data sources, timing, and estimation methods. Our estimate of GDI also deviates from GDP: it exceeds the officially published GDP significantly as it does GDE. Though we have been unable to fully explain where this discrepancy emerges and admittedly there is ample room for further improvements in our approach, the results seem to suggest that there is a certain merit to estimating GDI based on taxation data in order to shed further light on what is going on in Japan's economy.

We would like to thank a number of academic scholars including Kyoji Fukao, Fumio Funaoka, Fumio Hayashi, Hidehiko Ichimura, Yukinobu Kitamura, Tsutomu Miyagawa, Yoichi Nakamura, Kiyohiko Nishimura, Hiroshi Saigo, Mikio Suga, Yasuto Yoshizoe and the staff of the Bank of Japan for their helpful comments. The data for this analysis, Complete Survey of Current Taxation of Municipal Tax and Complete Survey of Current Taxation of Prefecture Tax were provided by the Ministry of Internal Affairs and Communications. The views expressed here, as well as any remaining errors, are those of the authors and should not be ascribed to the Bank of Japan or its Research and Statistics Department.

  1. *1Research and Statistics Department, Bank of Japan
    E-mail : hiroyuki.fujiwara@boj.or.jp
  2. *2Research and Statistics Department (currently Personnel and Corporate Affairs Department), Bank of Japan
    E-mail : yasutaka.ogawa@boj.or.jp

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