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Estimating Japan's Gross Domestic Income Based on Taxation Data

Hiroyuki Fujiwara and Yasutaka Ogawa
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Hiroyuki Fujiwara: Bank of Japan
Yasutaka Ogawa: Bank of Japan

No 16-E-20, Bank of Japan Working Paper Series from Bank of Japan

Abstract: In this paper, we develop a novel approach to estimate Japan's Gross Domestic Income (GDI) based on comprehensive taxation data. In the current National Accounts statistics in Japan, GDI is calculated so that its level is equal to that of Gross Domestic Product (GDP) by adjusting operating surplus and mixed income as a balancing item. The national accounting identity dictates that GDI should be equal to GDP and also Gross Domestic Expenditure (GDE). However, in reality, as in the case of the United States where GDI is estimated using taxation data, this identity may not hold because of differences in data sources, timing, and estimation methods. Our estimate of GDI also deviates from GDP: it exceeds the officially published GDP significantly as it does GDE. Though we have been unable to fully explain where this discrepancy emerges and admittedly there is ample room for further improvements in our approach, the results seem to suggest that there is a certain merit to estimating GDI based on taxation data in order to shed further light on what is going on in Japan's economy.

Date: 2016-12-07
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