Using the JIP (Japan Industry Productivity) Database constructed by the project team on potential growth at ESRI (Economic and Social Research Institute), our paper investigates several features of IT (Information Technology) investment in Japan.
The amount of IT investment in Japan is not so low when we compare it with that in the U.S. and other OECD countries. The estimation results on investment function are summarized as follows: 1) We find that the coefficient on cost of capital is significantly negative, which means the ITC (investment tax credit) is effective. 2) We also find positive spillover effects. 3) The Estimated increment of IT investment due to the ITC in 2003 is about 1 trillion yen.
