An Empirical Study on the Japanese Prefectural Economies Using Bayesian Statistical Models∗

To examine trends in total factor productivity (TFP) and structural fea-tures in Japanese prefectures, this paper presents a new quantitative approach based on a framework of Bayesian statistical models for the regional production functions. When we apply our proposed approach to a regional analysis of the postwar Japanese economy, the following results are obtained. As a regional characteristic in terms of factor elasticities, through the periods of 1955-1973 and 1974-1995, the higher the public capital elasticities, the lower the private capital elasticities in regions. The results also illustrate noteworthy changes in TFP trends before and after the period of first oil crisis. Specifically, the TFP in each prefectural economy shows an upward tendency during the period from the mid-1950s to the early 1970s. Overall, however, it stagnated in the period between the mid-1970s and the mid-1990s