Returns to Scale: Concept, Estimation and Analysis of Japan's Turbulent 1964–88 Economy

Canadian Journal of Economics, 44 (2) May, 451-485

University of Alberta School of Business Research Paper No. 2013-603

Posted: 6 Jun 2013

See all articles by W. Erwin Diewert

W. Erwin Diewert

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Takanobu Nakajima

Keio University - Faculty of Business and Commerce

Alice Orcutt Nakamura

University of Alberta - School of Business

Emi Nakamura

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business

Date Written: May 5, 2010

Abstract

There is policy interest in factoring productivity growth into technical progress and returns to scale components. Our approach uses exact index number methods to reduce the parameters that must be estimated, and allows us to exploit the cross-sectional dimension of plant-level panel data. We show that the same equation can also be used to estimate ‘Harberger’ scale economies and technical progress indicators that require fewer assumptions. Estimates of the elasticity of scale for Japanese establishments in three major industries over 1964–88 are presented. Our study spans the high growth era of the 1960s, two oil shocks, and other exogenous shocks.

JEL Classification: C43,D24

Suggested Citation

Diewert, W. Erwin and Nakajima, Takanobu and Nakamura, Alice Orcutt and Nakamura, Emi and Nakamura, Masao, Returns to Scale: Concept, Estimation and Analysis of Japan's Turbulent 1964–88 Economy (May 5, 2010). Canadian Journal of Economics, 44 (2) May, 451-485, University of Alberta School of Business Research Paper No. 2013-603, Available at SSRN: https://ssrn.com/abstract=2274953

W. Erwin Diewert (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Takanobu Nakajima

Keio University - Faculty of Business and Commerce ( email )

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Japan

Alice Orcutt Nakamura

University of Alberta - School of Business ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada

Emi Nakamura

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8434 (Phone)
604-822-8477 (Fax)

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