Do investment-specific technological changes matter for business fluctuations? Evidence from Japan

Yasuo Hirose, Takushi Kurozumi

研究成果: Article

11 引用 (Scopus)

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The observed decline in the relative price of investment goods to consumption goods in Japan suggests the existence of investment-specific technological (IST) changes. We examine whether IST changes are a major source of business fluctuations in Japan, by estimating a dynamic stochastic general equilibrium model using Bayesian methods. We show that IST changes are less important than neutral technological changes in explaining output fluctuations. We also demonstrate that investment fluctuations are mainly driven by shocks to investment adjustment costs. Such shocks represent variations of costs involved in changing investment spending, such as financial intermediation costs. We find that the estimated series of the investment adjustment cost shock correlates strongly with the diffusion index of firms' financial position in the Tankan (Short-term Economic Survey of Enterprises in Japan). Therefore, we argue that the large decline in investment growth in the early 1990s was due to an increase in investment adjustment costs stemming from firms' financial constraints after the collapse of Japan's asset price bubble.

元の言語English
ページ(範囲)208-230
ページ数23
ジャーナルPacific Economic Review
17
発行部数2
DOI
出版物ステータスPublished - 2012 5 1

ASJC Scopus subject areas

  • Economics and Econometrics

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