To date, most research on interwar period economic fluctuations in Japan has been based on Estimates of Long-Term Economic Statistics of Japan since 1868 (LTES), edited by Kazushi Ohkawa et al. Regardless, the LTES data are just one set of estimations. They require scrutiny, especially for the measurement of personal consumption, which has a high weight in the gross national expenditure. This paper re-estimates the LTES personal consumption expenditures by adjusting the estimation methods for certain expense categories and deducting imputations (which may have a large measurement error), and then calculates real GDP (adjusted real GDP) focusing on the market economy. The re-estimation presents no major changes from the LTES in the shape of the economic fluctuations of the 1920s, when the Japanese economy continuously posted "unbalanced growth." From the Showa Depression forward, however, while the LTES shows continued positive real GDP growth, the re-estimation indicates negative growth in adjusted real GDP in 1931. These findings remain robust after considering the bias from the deflator formula. Given the characteristics of the national accounts and the measurement error, these re-estimation results suggest that the severity of the Showa Depression may have been underestimated in the prior research.
Keywords: Japanese economy; Interwar period; Showa Depression; Great Depression; Personal consumption; National accounts; Deflator; Imputation
Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.