TFP and Production Factors over the Post-War Period in Japan's Macro Economy <Article>

This paper analyzes factors in the transition of production and the situation of productivity including (Total Factor Productivity) TFP using Japanese macro time series economic data from 1955 to 2000. Labor productivity in the overall Japanese economy slowly declined during the 1990s, yet TFP did not decline during the same period. These changes were measured using both the Total Cost approach and Solow's residuals, adjusted by the operating ratio of equipment. We found that the real reasons for Japan's slower growth rate during the 1990s were negative growth of capital and labor. The primary cause was a decline in the distribution of capital, which negatively affected the operating ratio and the growth rate of capital stock on the capital side, while also decreasing both labor hours and employees on the labor side. This corresponds with declining investment on the demand side as a factor in recession.