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Aggregate Implications of Changing Industrial Trends in Japan


April 8, 2024
Toyoichiro Shirota*1
Satoshi Tsuchida*2


This study examines the extent to which the long-term declining trend in Japan's GDP growth rate is attributable to factors common to all the industries or those specific to individual industries. By applying Japan's 1958-2019 data to a multi-industry network model, we obtained the following results. First, common factors explain approximately 60% of the variation in Japan's long-term GDP growth rate. This result contrasts to that in the US: common factors explain only about 30% of the secular trend in US GDP growth. Second, however, the impact of industry-specific factors is non-negligible. In particular, machinery-industry-specific factors explain much of the low growth in the past 20 years. Finally, the spillover effects from individual industries to the aggregate GDP depend on the role of each industry in the production network, and in Japan, the influence of investment-related industries such as the machinery industries and construction is substantial.

JEL classification
C32, E23, O41

trend growth, industrial linkages, production network, growth accounting

The authors thank Kosuke Aoki, Ichiro Fukunaga, Yoshihiko Hogen, Ryo Jinnai, Takashi Nagahata, Jouchi Nakajima, Yoichi Ueno for comments and discussions. Shirota is grateful for financial support from JSPS KAKENHI Grant-in-Aid for Scientific Research(C) No. 21K01396. Any remaining errors are the authors' own. The views expressed in this paper are those of the authors and do not necessarily reflect those of the authors' affiliations, including the Bank of Japan.

  1. *1College of Economics, Aoyama Gakuin University
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  2. *2Research and Statistics Department, Bank of Japan
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