Papers - NOMURA Koji

"Measuring the Output of the Education Sector in Japan, 1955–2019" (in Japanese)

Koji Nomura

Economic Analysis (Economic and Social Research Institute, Cabinet Office of Japan)  207   191 - 219 2023.06

Research paper (scientific journal), Single Work, Lead author, Last author, Corresponding author

　View Summary

Various methods have been considered in measuring non-market-produced educational services, but their proper evaluation requires the development of consistent measurements based on a common data foundation. This paper aims to approach price-quantity indices reflecting changes in the quality of education services using multiple approaches based on long-term time series data from the Education Services Production Database of Japan (ESJ) in Nomura (2020a), which is detailed crossclassification data on school education services in Japan, and the Extended Input-Output Table for Education Sector (EIOT) constructed in Nomura (2020b) based on the ESJ, covering 1955–2019. Four methods are applied: I. Unweighted output volume method, II. Output volume method, III. Input method, and IV. Hybrid method, in which the output volume method is applied to educational activities in a narrow sense and the input method to its auxiliary activities. In applying the Output volume method (II and IV), three output measures are defined: a. the number of students, b. total class hours of students, and c. total class hours of teachers. In Japan, where the number of students has been declining, applying the Output volume method based on the demand-side output indicators (a and b) is not necessarily effective as a quality-adjusted price/quantity indices. According to the measurement in this paper, IV. Hybrid method based on the supply-side output indicator (c) is evaluated as the most effective approach for capturing the quality changes from the point of view of the production account in the national accounts.

• Access to Document (DOI)

"Secondary Products in Japan's Production System" (in Japanese)

Koji Nomura and Kozo Miyagawa

Economic Analysis (Economic and Social Research Institute, Cabinet Office of Japan)  207   86 - 120 2023.06

Research paper (scientific journal), Joint Work, Lead author, Last author, Corresponding author

　View Summary

Measuring benchmark production system, including secondary products, plays a crucial role in determining the accuracy of GDP. The purpose of this paper is to find a type of relationship between main activities (395 activities based on Japan Standard Industrial Classification) and secondary products (SDS 900 products) based on the Survey on Diversification of Sales (SDS) conducted in 201819 by the Research Institute of Economy, Trade and Industry. Understanding the production structure of detailed secondary products by main activity enables us to examine the accuracy of the benchmark production system in the Japanese System of National Accounts (JSNA). Our examination shows that 13.0 trillion yen of the domestic production of secondary products (6.3 trillion yen in GDP or 1.2% of GDP) is likely to be omitted in the 2015 benchmark production in JSNA.

• Access to Document (DOI)

"Benchmark Measurement of Wholesale and Retail Outputs in Japan: Has the Use of Economic Census Improved GDP in the JSNA?" (in Japanese)

Koji Nomura and Kozo Miyagawa

Economic Analysis (Economic and Social Research Institute, Cabinet Office of Japan)  207   121 - 144 2023.06

Research paper (scientific journal), Joint Work, Lead author, Last author, Corresponding author

　View Summary

The benchmark measurement of wholesale and retail outputs in Japan has been based mainly on the Census of Commerce, but since the 2011 benchmark year, it was switched to be based on the Economic Census, which was newly conducted in 2012. Our study investigates five benchmark years since 1995, the changes in the measurement framework have significantly impacted the quality of the Benchmark Input-Output Table, and the current benchmark estimates of wholesale and retail outputs are underestimated. The GDP shortfalls are estimated at 15.8 trillion yen (3.2% of the aggregate GDP) in 2011 and 11.3 trillion yen (2.1%) in 2015. This underestimation bias is a side effect of the overly decentralized nature of Japan’s statistical system. More integrated development of benchmarks and annual estimates is required in the Japanese System of National Accounts (JSNA).

• Access to Document (DOI)

"How Can We Improve GDP in the JSNA?" (in Japanese)

Koji Nomura

Economic Analysis (Economic and Social Research Institute, Cabinet Office of Japan)  207   1 - 21 2023.06

Research paper (scientific journal), Single Work, Lead author, Last author, Corresponding author

• Access to Document (DOI)

"Improving the SNA: Alternative Measures of Output, Input, Income and Productivity for China"

W. Erwin Diewert, Koji Nomura, and Chihiro Shimizu

Vancouver School of Economics Discussion Paper (The University of British Columbia,)  23-04 2023.06

Research paper (other academic), Joint Work

　View Summary

The paper defines and computes alternative measures of output, input and Total Factor Productivity (TFP) for the production sector of the Chinese economy. The current System of National Accounts (SNA) input measure that corresponds to Gross Domestic Product (GDP) does not measure the income generated by the production sector since it includes depreciation and excludes capital gains and losses on assets used in the production sector. The paper suggests an accounting framework that addresses these problems with the existing SNA gross income measure and implements a net income measure using the Augmented Productivity Database (APDB) developed by Asian Productivity Organization and Keio University for China over the years 1970-2020. Real gross and real net income generated by the Chinese production sector is decomposed into explanatory factors including TFP growth using the framework suggested by Jorgenson and Diewert and Morrison. TFP growth is further decomposed into technical progress and inefficiency components using the nonparametric approach developed by Diewert and Fox. The APDB has estimates for the price and quantity of agricultural, industrial, commercial and residential land used in China. The paper argues that changes in land use should be treated in the same manner as inventory change and added to the alternative output measures. It turns out that Jorgensonian user costs for land are frequently negative. The problems associated with negative user costs are discussed in the paper.

"The Over-Valued Yen and the Low-Pressure Economy Repressed Productivity in Japan"

Koichi Hamada and Koji Nomura

International Journal of Economics and Finance (Canadian Center of Science and Education)  15 ( 6 ) 1 - 13 2023.04

Research paper (scientific journal), Joint Work, Accepted,  ISSN  1916-971X

　View Summary

In the post-war economy of Japan, the high-pressure economy as defined by Okun and Yellen maintained its real exchange rate relatively low and kept the economy mildly inflationary. Not only did it encourage short-term employment but it also fostered a long-term productivity trend as measured by its total factor productivity (TFP). International pressure for a stronger yen after the Plaza Accord, coupled with the restrictive monetary policy of the Bank of Japan, created a large exchange rate gap and accordingly, the extreme Japan-U.S. output price gap, referred to as the price level index (PLI), in 1995. It further caused the squeeze of domestic wages and led to the deflationary pressure that plagued the Japanese economy for decades. In our opinion, the exchange rate also depressed domestic capital accumulation caused by the internationally low nominal rate of return on capital and that situation caused the TFP stagnation in Japan.


• Access to Document (DOI)

"Energy Input and Economic Growth: What Can We Learn from the Japanese Economic Experiences?" (in Japanese)

Koji Nomura

Economic Analysis (Economic and Social Research Institute, Cabinet Office of Japan)  206   24 - 53 2023.03

Research paper (scientific journal), Single Work

　View Summary

What can we learn from the experiences of sustained energy productivity improvement (EPI) in the economic growth and structural change of the postwar Japanese economy to guide ap-propriate energy and environmental policies? This paper aims to derive implications for policy by discussing the structural factors contained within the macro-observed EPI gross indicators, es-pecially the factors behind the acceleration of the EPI since the late 2000s. The measurements in this paper show that there has been no policy-driven acceleration in the sustained realization of the EPI in the postwar Japanese economy, but rather a significant diminution in the speed of improvement over the past half-century until the late 2000s. The acceleration of the EPI in recent years has been accompanied by a shift of energy-intensive goods to overseas production, and domestic industries that are required to curb consumption have been forced to lower their capital and labor productivity. The evaluation, including price changes, shows that the real unit energy cost facing the Japanese economy rose sharply in 2021–22, increasing its vulnerability to energy price hikes. In an energy transition that will take decades, it is necessary to ensure economic efficiency during the transition period without obsessing over poor domestic emission reductions.

"Development of High-Frequency Indicators of Real Unit Energy Cost in Japan” (in Japanese)

Koji Nomura and Sho Inaba

RCGW Discussion Paper (Research Center of Global Warming, Research Institute of Capital Formation, Development Bank of Japan)   ( 68 )  2023.03

Research paper (bulletin of university, research institution), Joint Work, Lead author, Corresponding author

　View Summary

While carbon neutrality toward 2050 may provide growth opportunities for Japanese companies with advantages in energy-saving and other technologies, the impact of the increased cost burden on the competitiveness of the Japanese economy must be carefully monitored during the long-term transition process. In a Japanese economy that has had to face relatively high energy prices for a century and boasts a highly energy-efficient industrial structure, the costs of additional energy savings have already multiplied significantly. In addition, after more than a decade of policy support by the Feed-in Tariff (FIT) program, the expansion of renewable electricity has significantly increased the price of electricity in Japan, and the burden on households and industry has grown to several times what was assumed when the FIT program was introduced in 2012. It is increasingly important to observe the impact of energy price hikes on Japanese industry and households, as well as the cost burdens required for the energy transition, in near-real time. This paper introduces the development of monthly estimates of the Real Unit Energy Cost (RUEC) and its components, an indicator that comprehensively assesses the resilience of the domestic economy to energy price hikes, and reports preliminary figures through January 2023, the most recent month available.

"Half a Century of Experience with Labor Input and Productivity Growths in the Vietnamese Economy" (in Japanese)

Koji Nomura

Okayama Economic Review (Economic Association of Okayama University)  54 ( 3 ) 37 - 59 2023.03

Research paper (bulletin of university, research institution), Single Work

　View Summary

This paper aims to analyze changes in productivity over a half-century by measuring quality-adjusted labor input (QALI) in the Vietnamese economy for the period 1970–2020. The biggest barrier to the construction of productivity account for the Vietnamese economy is that compensation of employees (COE) is not estimated in the Vietnamese System of National Accounts (VSNA). The time-series estimates on hours worked and hourly wage rates, which are cross-classified by gender, education, age, and employment status, are constructed based on fragmentary available data in Vietnam. The constructed data enables to development of not only the QALI but also the COE and labor share with a micro foundation. In August 2022, the VSNA based on the 2008 SNA was released, resulting in a significant upward revision of GDP. Based on the new VSNA, which extends back to 1970 in this paper, the labor quality improvement has accelerated from 0.6% per year in 1970–2000 to 2.0% per year in 2000–20 (mainly through improvements in education). This acceleration explained 65% of the increase in QALI and 14% of the increase in labor productivity over the same period. This paper also finds that total factor productivity in the Vietnamese economy started to improve later than in the previous analysis, becoming more pronounced in the second half of the 2010s.

• Access to Document (DOI)

"Toward the Energy Transition of Japan"

Koji Nomura

Energy Productivity and Economic Growth (Springer)     209 - 246 2023.01

Part of collection (book), Single Work

　View Summary

Transitioning to carbon neutrality in Japan by 2050 is a process that will take decades, and it will be more difficult if economic efficiency deteriorates in the process. Examining the discrepancy between past projections of greenhouse-gas emission reduction targets and their impact on economic growth and the actual economy realized can provide useful insights for future feasibility studies. In addition, the observed facts measured in the chapters of this book from the experience of the Japanese economic growth serve as lessons, which show three forms in which economic growth and emission reductions are compatible. While summarizing the prospects of international price differentials for electricity and renewable energy, this chapter discusses the problems of Japan’s current energy policy and the possibility of policy changes toward an energy transition.

• Access to Document (DOI)

"Indirect Import of Electricity"

Koji Nomura

Energy Productivity and Economic Growth (Springer)     177 - 207 2023.01

Part of collection (book), Single Work

　View Summary

Even if Japan cannot import electricity directly, it can be understood as indirectly importing electricity by reducing domestic production of goods that consume large amounts of electricity and switching to imports. This chapter constructs Effective Import Dependency (EID) as an indicator of indirect dependence on electricity imports and measures the electricity EID from 1960 to 2018 for the Japanese economy based on an input–output analysis framework. The measurements show three major transition periods: a rise after the first oil shock, a fall from the 1980s, and a re-rise from the mid-1990s. In particular, during the recent re-rise period, the economy-wide electricity EID doubled from 10.3% in 1995 to 22.8% in 2018. The Japanese government has attributed the recent decline in domestic electricity demand to the decoupling of economic growth and energy consumption resulting from successful energy conservation policy, and it is increasingly confident about further tightening regulations. However, the measurements in this chapter show that the effect of increased electricity imported indirectly, which has not been directly observed, explains about 30% of the recent slump in domestic electricity demand.

• Access to Document (DOI)

"Energy Productivity and Overall Efficiency"

Koji Nomura

Energy Productivity and Economic Growth (Springer)     121 - 176 2023.01

Part of collection (book), Single Work

　View Summary

This chapter analyzes the cyclical relationship between energy productivity improvement (EPI) and total factor productivity growth (TFPG). The first direction of the cycle is from TFPG to EPI. In Japan’s economic growth, technological changes that require more energy input per labor unit were robustly observed. Although this directly depressed energy productivity, it contributed to EPI by increasing labor productivity and TFP, offsetting the negative effect. This chapter formulates an EPI consisting of an energy-saving factor through an increase in the capital-energy ratio, an energy-enhancing factor through a decline in the labor-energy ratio, and an overall-efficiency factor as TFPG. The measurement shows that the most significant factor in achieving sustainable EPI in the postwar Japanese economy was TFPG, not the energy-saving factor. The second direction of the cycle is from EPI to TFPG. Since the 1990s, further energy-saving investment led to a significant decline in capital productivity, and TFPG tended to turn negative in some energy-intensive industries. In addition, EPI in the service sector has been achieved while reducing energy use per labor unit, which has been at the expense of labor productivity and TFPG. These suggest the difficulty of balancing the pursuit of EPI with the economy’s overall efficiency.

• Access to Document (DOI)

"Real Energy Cost"

Koji Nomura

Energy Productivity and Economic Growth (Springer)     81 - 120 2023.01

Part of collection (book), Single Work

　View Summary

This chapter assesses the economic resilience of the Japanese economy to rising energy prices by measuring the real unit energy cost (RUEC). The Japan-U.S. level comparison shows that the RUEC gap has been widening since the U.S. shale revolution and, in recent years, has increased to a level 39% higher than the U.S., approaching the peak in the 1960s. The factors behind this are the narrowing of the energy productivity gap (Japan’s advantage has been halved over the past two decades) and the widening of the real energy price gap. The turning point when Japan’s RUEC started to rise was in the mid-1990s. Since then, real energy price growth has increased from 0.8% on average in 1973–1995, which included two oil shocks, to 1.7% in 1995–2019. During this period, the biggest factor in the acceleration of real energy prices was the 15-year-long decline in nominal wages from 1997.

• Access to Document (DOI)

"Energy and Economic Growth"

Koji Nomura

Energy Productivity and Economic Growth (Springer)     1 - 18 2023.01

Part of collection (book), Single Work

　View Summary

This chapter provides an overview of the changes in energy consumption and energy productivity throughout Japan’s economic growth over the 135 years from 1885 to 2019. During this observation period, the Japanese economy succeeded in sustainably improving labor productivity, except for times of war and temporary recession periods. However, energy productivity has followed a U-shaped curve, declining until World War II and then moving on a track of steady improvement with repeated acceleration and deceleration. The sustained improvement in energy productivity in postwar Japan includes the effects of structural changes, such as rapid heavy and chemical industrialization, high energy prices caused by oil shocks, and prolonged economic stagnation. This chapter also provides an overview of each chapter’s focus and methodological framework and explains the structure of the productivity account developed in this book to analyze the sources of energy productivity changes.

• Access to Document (DOI)

"Industry Origins of Energy Productivity Improvement"

Koji Nomura

Energy Productivity and Economic Growth (Springer)     19 - 80 2023.01

Part of collection (book), Single Work

　View Summary

This chapter measures the industry origins of the sustained energy productivity improvement (EPI) in postwar Japan from 1955 to 2019 by explicitly considering changes in energy quality, such as the progress of electrification, and changes in industrial structure. The golden age of energy productivity according to its gross measure, which is a simple economy-wide indicator, was seen in Period-II (post-oil crisis: 1973–1990) when the annual growth rate of EPI accelerated to 2.7% from 1.3% in the preceding Period-I (high economic growth: 1955–1973). However, the adjusted EPI peaked in Period-I when energy quality and industrial structure changes are controlled (1.5%). It then decelerated to 1.4% in Period-II and almost zero in Period-III (post-bubble economy: 1990–2008). In Period-IV (post-global financial crisis: 2008–2019), the adjusted EPI recovered to 0.5%, largely because of changes in composition at the product level. Under certain assumptions, the baseline estimate of future gross EPI is expected to be 1.0% per annum, much lower than the policy target of 2.5% set by the Japanese government in 2021.

• Access to Document (DOI)

"Can Energy Saving be Accelerated? -Postwar Japanese Industrial Experience and Future Prospects" (in Japanese)

Koji Nomura

Economic Statistics Research (Keizai Sangyo Toukei Kyokai)  50 ( Ⅲ ) 1 - 46 2022.12

Research paper (bulletin of university, research institution), Single Work

　View Summary

近年のエネルギー価格の高騰や2050年のカーボンニュートラル目標を受け、省エネへの期待が再び高まっている。世界金融危機後の日本経済では電力需要が減少し、エネルギー生産性も改善したかようにみえる。本稿はその持続可能性を検討するため、1955年から2019年までの長期生産性勘定とそれに整合して構築されたエネルギー勘定に基づき、エネルギー生産性変化の構造的な要因を分析することを目的としている。簡易に観察されるマクロ指標である（グロスの）エネルギー生産性改善は、高度経済を実現した第I期（1955–73年）の年率1.3%から、オイルショック後の第II期（1973–90年）には2.7%へと大きく加速した。将来、政府はその再現を期待するが、エネルギー品質や産業構造の変化を統御した本稿での測定によれば、真のエネルギー生産性改善のピークはむしろ第I期（年率1.4%）にあり、第II期には1.3%へと、そして経済成長が低迷した第III期（ポストバブル経済期：1990–2008年）ではほぼゼロにまで落ち込んでいる。世界金融危機後の第IV期（2008–19年）では再び年率0.5%へと回復したが、それも製品レベルでの構成変化（海外への生産シフト）に大きく依存しており、技術的な改善による効果は限定的である。将来展望として、一定の仮定に基づくエネルギー生産性改善のスピードとしての本稿の試算では、（電力化や産業構造変化などの影響を含めた）グロス指標によっても年率1.0%ほどであり、政府目標の半分にも満たない。適切な政策運営のためには、そうした目標と現実との乖離がさらなる産業空洞化によって埋められることのないよう、エネルギー消費削減が実現される構造的要因の把握が求められる。

"Measuring Public Civil Engineering Output Prices Based on Bidding Data in Japan, 1989–2021" (in Japanese)

Koji Nomura and Sho Inaba

KEO Discussion Paper (Keio Economic Observatory, Keio University)   ( 173 ) 1 - 34 2022.10

Research paper (bulletin of university, research institution), Joint Work, Lead author, Last author, Corresponding author

　View Summary

This paper develops the monthly estimates on the successful bid rate based on the Japanese bidding data from 1989, when the competitive bidding system was introduced, to 2021. Using these estimates, we evaluate revisions to the input-cost-type output price used in the Japanese system of national accounts. As for the annual price index for public civil enginerring as a whole, the growth of the current price index based on the input method (“Construction Cost Deflators”) has increased by 36.3% over the entire measurement period of this paper (33 years), while the growth of price index adjusted for bidding rate is 26.9%. It suggests that the promotion of competition through the introduction of the bidding system contributed to Japan's long-term decline in the prices of public civil engineering. In particular, the deviation has become larger due to the impact of intensified price competition since the mid-2000s. Based on the adjusted price index measured in this paper, the current estimate of real net capital stock of the entire public civil engineering is assessed to be underestimated by 3.5% (19.0 trillion yen at the current price) as of the end of 2020.

• Access to Document (DOI)

"Alternative Measures for Chinese Productivity Growth"

Erwin Diewert, Koji Nomura and Chihiro Shimizu

The 7th WorldKLEMS Conference, Manchester  2022.10

Research paper (conference, symposium, etc.), Joint Work

　View Summary

The paper constructs estimates of China’s Total Factor Productivity (TFP) growth over the period 1970-2020 using primarily the Asian Productivity Organization (APO) data base augmented by additional data developed by Koji Nomura at Keio University. China's TFP growth will be measured using the following methods: (i) the exact index number method developed by Jorgenson (and his coworkers) and Diewert and Morrison and (ii) a nonparametric method developed by Diewert and Fox. Economy wide estimates of rates of return on assets will also be calculated. Estimates for quality adjusted labour developed by Nomura will be used as well as estimates for missing inputs such as Land. Finally, instead of using GDP as the output concept, alternative estimates of TFP growth using net output as the output concept will be provided. The alternative measure is useful in explaining Chinese real income growth.

"Effective Rates of Protection in the U.S. and Japanese Industries" (in Japanese)

Koji Nomura

Economic Statistics Research (Keizai Sangyo Toukei Kyokai)  48 ( Ⅲ ) 16 - 46 2020.12

Research paper (bulletin of university, research institution), Single Work

　View Summary

本稿は日米両国における商品別輸入相手国別関税マトリックス（関税額および従価税換算関税率）を構築し、日米国際産業連関表のフレームワークのもとで関税による産業保護率の日米格差を測定することを目的としている。関税による産業保護率の指標として、産業の生産物に対する名目保護率、中間投入される輸入財（輸入中間財）に課される関税を考慮した有効保護率とともに、本稿では間接的な輸入中間財の投入に課される関税を考慮した有効保護率を定義し、2011年、2015年および2018年を対象とした測定をおこなう。直接間接的な輸入中間財に課される関税を考慮すれば、食料品や農林水産品などに傾斜して保護的となる日本の関税体系は、自動車製造業や機械製造業などでは間接効果を含んだ有効保護率が負値となることが示される。製造業における競争力棄損を回避するためには、ネットの有効保護率として非保護効果が上回るような現行関税体系の見直しが求められる。

"Measurement of Labor Shares and Quality-adjusted Labor Inputs in Vietnam, 1970–2018"

Koji Nomura and Hiroshi Shirane

KEO Discussion Paper (Keio Economic Observatory, Keio University)   ( 156 ) 1 - 32 2020.12

Research paper (bulletin of university, research institution), Joint Work, Lead author, Last author, Corresponding author

　View Summary

One of the largest obstacles to developing a productivity account in Vietnam is the lack of the estimate on compensations of employees in the System of National Accounts. This paper constructs the data for Vietnam on hours worked by type of workers, which are cross classified by gender, education attainment, age, and employment status, and on hourly wages in each type of labor for the period 1970–2018. The data constructed in this paper is used to estimate labor share at the aggregate level, which has a micro foundation, and to develop the measure of the quality-adjusted labor input. Our estimates show that the improvement in labor quality was very modest at an annual rate of 0.1% from 1970 to 2000, but accelerated to an average of 1.9% per year from 2000 to 2018, accounting for 57.9% of the growth of quality-adjusted labor input of 3.3%.

• Access to Document (DOI)