In this paper, TFP growth rates for 10 Japanese manufacturing sectors were measured under a short-run equilibrium model in which capital stock is assumed to be quasi-fixed. Using a short-run generalized Leontief cost function, joint estimation of markups, scale economies, and capacity utilization gave the following results : (1). The variation in adjusted TFP growth rates for all industries turned out considerably less than that estimated from the conventional growth accounting analysis. (2). Both adjustments for capacity utilization and economies of scale have contributed to this, but a significant portion of productivity declines since 1991 was found to be due to capacity utilization fluctuations rather than technical change factors.
