Academic journal article Quarterly Journal of Business and Economics

Early Japanese Development and the Role of Trade: A Correction

Academic journal article Quarterly Journal of Business and Economics

Early Japanese Development and the Role of Trade: A Correction

Article excerpt

A 1988 paper on the relationship between trade and growth in early Japan (Grabowski, 1988) presented results of a simultaneous equation model and a simulation analysis (Tables 4 and 5). Errors in the program used to estimate the simultaneous equation model have since been discovered. Some of the data were typed incorrectly, and several variables in the input statement were mislabeled. The program has been corrected, and the model has been reestimated using three stage least squares.

The results derived from the reestimation are presented in Table 4 (amended) and Table 5 (amended). The original Tables 4 and 5 also are reproduced with definitions of the symbols used.

The results of the original and new simulations, Table 5 and Table 5 (amended), are similar concerning the impact of raising the ratio of exports to gross national expenditure. This would result in a significant increase in the overall rate of growth. When the ratio of gross capital formation to gross national expenditures rises, the corrected results differ significantly from the original. Instead of the rate of growth rising, it falls. In the case of a 100 percent increase in the ratio of gross capital formation to gross national expenditures, the growth rate becomes negative.

The last result is particularly troublesome, as it is difficult to understand under what circumstances this could occur. …

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