Effects of Measurement Error on the Output Gap in Japan

Potential output is the largest amount of products that can be produced by fully utilizing available labor and capital stock; the output gap is defined as the discrepancy between actual and potential output. If data on production factors contain measurement errors, total factor productivity (TFP) cannot be estimated accurately from the Solow residual(i.e., the portion of output that is not attributable to labor and capital inputs). This may give rise to distortions in the estimation of potential output and the output gap. The primary purpose of this paper is to discuss theoretically how measurement errors and quality changes in production factors affect estimates of potential output and the output gap. The main results are (1) that effects of quality changes in production factors can be left in the Solow residual for correct estimation of potential output and the output gap, but (2) that measurement errors in utilization of capital stock and labor should be removed. Estimation of Japanfs output gap, in particular, may be distorted by the absence of data on capacity utilization in non-manufacturing sectors. To resolve this problem, we consider two definitions of output gap and compare their performance. The first definition (the conventional output gap) assumes capacity utilization to be 100 percent in non-manufacturing sectors. Then we fit a certain trend to the Solow residual and define the trend as TFP and the regression residual as the measurement error of capacity utilization in non-manufacturing sectors. The second definition (the new output gap) uses data on electricity consumption to directly estimate capacity utilization in non-manufacturing sectors. In this case, we can take the Solow residual to be TFP. Next, we compare the performance of the two definitions of output gap in terms of their consistency with the reference dates of business cycle and with various DIs in Short-Term Economic Survey of Enterprises in Japan published by the Bank of Japan, including the business conditions DI. We show that the new output gap is superior to the conventional output gap. Furthermore, when the new output gap is used in a Phillips curve, estimates of parameters are more stable than when we use the conventional output gap. These results suggest that the new output gap is a suitable measure of slackness in the Japanese economy.

Policy Coordination in East Asia and across the Pacific

In this paper, we construct a macro-econometric model that describes the economic activity in the Asia-Pacific area and provide quantitative insights into the recent policy debates on monetary and currency coordination among the East Asian economies. The model includes a wide variety of monetary and currency policy rules that the East Asian economies adopt and allows for one country's policymaking to have substantial effects on foreign countries. We apply the model to three current policy issues: (1) the desirability of currency basket pegs in East Asia, (2) the anticipated effects of China's currency policy reform, and (3) the non-negativity constraint on Japanese nominal interest rates. The simulation analyses show the external economy effects of policy rules quantitatively and suggest the difficulty of monetary and currency policy coordination among the East Asian economies.

A New Technique for Simultaneous Estimation of Potential Output and the Phillips Curve

A new technique is demonstrated for the simultaneous estimation of potential output and the Phillips curve. In this paper, we define potential output as the non-accelerating inflation level of output (NAILO). The NAILO is not a simple trend of actual output. Instead, it is the critical level of output such that, were actual output at this level, the inflation rate would be neither accelerating nor decelerating. Our application is the case of Japan, for which we estimate both the NAILO and the Phillips curve and investigate their properties. It is shown that during the 1980s and 1990s, the Japanese output gap, as measured using the NAILO, was negative on average, reflecting the global trend of disinflation. We also point out that this NAILO-based output gap has displayed a tendency to move in line with corporate sentiment and is thus a useful indicator of business conditions. However, being subject to re-estimation due to the revision of source data and the arrival of new data, the NAILO estimate is surrounded by uncertainty. This uncertainty needs to be kept in mind in real-time analysis, and the NAILO estimate should be interpreted with care, particularly in the process of policymaking.

Real-Time Estimation of the Output Gap in Japan and its Usefulness for Inflation Forecasting and Policymaking

This paper examines the methods used by the Bank of Japan for the estimation of the output gap. Attention is paid to the real-time estimation problem. After reviewing the evolution of output gap estimation at the Bank, I discuss advantages and disadvantages of the various output gap measures. First, I examine the usefulness of the output gap for inflation forecasting and show that the real-time output gap sometimes includes much noise. Second, I investigate the implications of the real-time estimation problem for the policy evaluation. Third, I exploit TANKAN to enhance the usefulness of the real-time output gap. --output gap,real-time estimation,inflation forecasting,Taylor Rule

Real-Time Estimation of the Output Gap in Japan and its Usefulness for Inflation Forecasting and Policymaking

This paper examines the methods used by the Bank of Japan for the estimation of the output gap. Attention is paid to the real-time estimation problem. After reviewing the evolution of output gap estimation at the Bank, I discuss advantages and disadvantages of the various output gap measures. First, I examine the usefulness of the output gap for inflation forecasting and show that the real-time output gap sometimes includes much noise. Second, I investigate the implications of the real-time estimation problem for the policy evaluation. Third, I exploit TANKAN to enhance the usefulness of the real-time output gap

Five-year quality of life assessment after carbon ion radiotherapy for prostate cancer

The aim of this study was to prospectively assess 5-year health-related quality of life (HRQOL) of patients treated with carbon ion radiotherapy (C-ion RT) for clinically localized prostate cancer. A total of 417 patients received carbon ion radiotherapy at a total dose of 63–66 Gray-equivalents (GyE) in 20 fractions over 5 weeks, and neoadjuvant and adjuvant androgen deprivation therapy (ADT) were administered for intermediate and high-risk patients. A HRQOL assessment was performed at five time points (immediately before the initiation of C-ion RT, immediately after, and at 12, 36 and 60 months after completion of C-ion RT) using Functional Assessment of Cancer Therapy (FACT) questionnaires. FACT-G and FACT-P scores were significantly decreased; however, the absolute change after 60 months was minimal. The transient decreases in the Trial Outcome Index (TOI) score returned to their baseline levels. Use of ADT, presence of adverse events, and biochemical failure were related to lower scores. Scores of subdomains of FACT instruments indicated characteristic changes. The pattern of HRQOL change after C-ion RT was similar to that of other modalities. Further controlled studies focusing on a HRQOL in patients with prostate cancer are warranted

Significant impact of biochemical recurrence on overall mortality in patients with high-risk prostate cancer after carbon-ion radiotherapy combined with androgen deprivation therapy

BACKGROUNDWhether biochemical recurrence (BR) is a significant predictive factor of mortality after definitive radiation therapy for prostate cancer remains unknown. The aim of the current study was to investigate the relation between BR and overall mortality (OAM) in high-risk prostate cancer patients who were treated with carbon-ion radiotherapy (CIRT) and had long-term follow-up in 2 prospective trials.METHODSIn the 2 phase 2 clinical trials, which involved 466 prostate cancer patients who received 63.0 to 66.0 Gy of CIRT (relative biological effect) in 20 fractions between 2000 and 2007, 324 patients who were deemed to be at high risk on the basis of the modified D\u27Amico classification criteria and received CIRT along with androgen-deprivation therapy (ADT) were examined. The OAM rate was adjusted for the ADT duration, and multivariate analyses using a Cox proportional hazards model were performed for OAM with BR as a time-dependent covariate.RESULTSThe median follow-up period was 107.4 months, and the 5- and 10-year OAM rates after adjustments for the ADT duration were 7.0% (95% confidence interval [CI], 4.0%-9.4%) and 23.9% (95% CI, 16.4%-26.2%), respectively. A multivariate analysis revealed that the presence of BR (hazard ratio, 2.82; 95% Cl, 1.57-5.08; P = .001) was one of the predictive factors for OAM. On the other hand, the duration of ADT had no impact on OAM.CONCLUSIONSBR after CIRT combined with ADT is an independent predictive factor for OAM in high-risk prostate cancer patients. The results of this study could be applied to other high-dose radiation therapies

Perceived Environmental Factors Associated with Physical Activity among Normal-Weight and Overweight Japanese Men

Although it is crucial to examine the environmental correlates of physical activity (PA) for developing more effective interventions for overweight populations, limited studies have investigated differences in the environmental correlates on body mass index (BMI). The purpose of the present study was to examine the perceived environmental correlates of PA among normal-weight and overweight Japanese men. Data were analyzed for 1,420 men (aged 44.4 ± 8.3 years), who responded to an internet-based cross-sectional survey of answering the short version of the International Physical Activity Questionnaire and its Environment Module. Binary logistic regression analyses were utilized to examine the environmental factors associated with meeting the PA recommendation (150 minutes/week) between the normal-weight and overweight men. After adjusting for socio-demographic variables, common and different environmental correlates of PA were observed among normal-weight and overweight men. Furthermore, significant interactions regarding PA were observed between BMI status and two environmental correlates: access to public transportation (P = 0.03) and crime safety during the day (P = 0.01). The results indicated that BMI status is a potential moderator between perceived environmental factors and PA and suggested that different environmental intervention approaches should be developed for overweight populations