Heterogeneity of Capital Stocks in Japan: Classification by Factor Analysis
Jun-Ichi Nakamura and
Additional contact information
Konomi Tonogi: Kanagawa University
Kazumi Asako: Hitotsubashi University
Journal of Knowledge Management, Economics and Information Technology, 2014, vol. 4, issue 2, 10
This paper examines the heterogeneity of capital stocks using financial statement data of publicly listed Japanese firms. We conduct factor analysis on investment rates among various capital goods and estimate factor loadings of each as its reactions to common factors like total factor productivity (TFP) shocks. Then we estimate the uniqueness for each investment rate, which is the percentage of its variance that is not explained by the common factors. If the estimated factor loadings are similar between some of the heterogeneous capital goods, it may well imply that the adjustment cost structure of these investments is also similar. Further, if some of the estimated values of uniqueness are small, it suggests that certain theoretical models may track the dynamics of the investment rates well. Our estimation results show that Building and Structure have similar factor loadings as do Machinery & Equipment, Vehicles & Delivery Equipment, and Tools, Furniture, & Fixture. This suggests that we could remedy the Curse of Dimensionality by bundling the investments that have similar factor loadings together and that identifying the functional structures of each group of capital goods can greatly improve the performance of empirical investment equations.
JEL-codes: D21 D92 E22 E32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Heterogeneity of Capital Stocks in Japan: Classification by Factor Analysis (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spp:jkmeit:1445
Access Statistics for this article
More articles in Journal of Knowledge Management, Economics and Information Technology from ScientificPapers.org
Bibliographic data for series maintained by Adrian Ghencea ().