TY  - JOUR
AU  - Ando, Albert
AU  - Christelis, Dimitrios
AU  - Miyagawa, Tsutomu
TI  - Inefficiency of Corporate Investment and Distortion of Savings Behavior in Japan
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9444
PY  - 2003
Y2  - January 2003
DO  - 10.3386/w9444
UR  - http://www.nber.org/papers/w9444
L1  - http://www.nber.org/papers/w9444.pdf
N1  - Author contact info:
Albert Ando
E-Mail: N/A user is deceased

Dimitris Christelis
CSEF, University of Naples Federico II
Via Cintia, Monte S. Angelo
I-80126 Napoli (NA)
ITALY
Tel: (+39) 081 675372
Fax: (+39) 081 675372
E-Mail: dimitris.christelis@gmail.com

Tsutomu Miyagawa
Faculty of Economics
Gakushuin University
Mejiro 1-5-1, Toshima-ku
Tokyo 171-8588, JAPAN
E-Mail: tsutomu.miyagawa@gakushuin.ac.jp
M1  - published as Albert Ando, Dimitrios Christelis, Tsutomu Miyagawa. "Inefficiency of Corporate Investment and Distortion of Savings Behavior in Japan," in Magnus Blomström, Jennifer Corbett, Fumio Hayashi and Anil Kashyap, editors, "Structural Impediments to Growth in Japan" University of Chicago Press (2003)

AB  - The value of corporate equity in Japan is dramatically smaller than that implied by the sum of the reproduction cost of accumulated investment and the market value of land owned by corporations (that is, the Tobin's average 'q' is much smaller than unity). This discrepancy appears to result from the very low rate of return earned on corporate investment and also from the extraordinarily small and stagnant dividend payments. It has persisted at least since l965, and its size has become progressively larger over time. If the value of corporate equity were sufficiently high to close the discrepancy, the net worth of the household sector would have been larger than its actual value by some 395 trillion yen in l998. Such an addition to household net worth would have generated additional consumption demand of at least 15 trillion yen. This paper traces the development of this valuation discrepancy over time, and explores its possible causes. In the process, we prepare an alternative estimate of the capital stock and its depreciation to those offered in the National Accounts. The basic difference is that the depreciation rates underlying our calculations are substantially lower than those used in the Japanese National Accounts, and closer to values prevailing in the United States. The qualitative characteristics of our results, however, remain unaffected by the choice between these alternative estimates.
ER  -