Tsutomu Miyagawa, Takayuki Ishikawa, 27 August 2021

The Japanese economy has seen a decline in the contribution of capital accumulation to economic growth since 2000. This column uses over 30 years of national productivity data to explore this trend. It finds that the fall in tangible capital accumulation has largely been offset by investment into intangible capital. However, the growth in tangible and intangible capital accumulation has been imbalanced, calling for support of both types of asset accumulation. 

Andrea Eisfeldt, Edward Kim, Dimitris Papanikolaou, 24 March 2021

Intangible assets are absent from traditional measures of value, despite their large and growing importance in firms’ capital stocks. As a result, the fundamental anchor for value that uses book assets is mismeasured. This column presents a new intangibles-adjusted value factor based on an improvement to the traditional Fama and French approach. The new measure prices assets as well as or better than the traditional value factor but yields substantially higher returns. Both asset pricing researchers and practitioners can benefit from incorporating intangibles in their fields of work. 

Tsuyoshi Nakamura, Hiroshi Ohashi, 20 October 2020

Recent studies have shown average firm markups increasing in the US and other developed countries, driven by a small share of ‘superstar’ firms which have expanded their market shares and consolidated technological advantages. This column uses firm-level data to show that similar trends in markups are missing in Japan. In addition, intangible capital investments do not boost market power in the country. Instead, a strong predictor of average markup in Japan is firm age, with older firms enjoying significantly higher market power. 

Kaoru Hosono, Miho Takizawa, Kenta Yamanouchi, 21 June 2020

How do firms grow as they age after establishment? What drives high growth rates for young firms? Using a large dataset from Japan for the period from 1995 to 2015, this column argues that the accumulation of intangible capital plays a significant role in the growth of physical productivity, which, in turn, accounts for a major part of sales growth as firms age. Of the three types of intangible capital – organisational capital, software, and R&D stocks – organisational capital explains a large part of the sales growth.

Maria Savona, 17 January 2020

Personal data have value, and economists failed to predict that this value would become concentrated in the hands of digital platforms. The column presents a novel data-rights approach to redistributing data value while not undermining the ethical, legal and governance challenges of doing so. This can be done by giving individuals authorship rights to their personal data.

Meghana Ayyagari, Asli Demirgüç-Kunt, Vojislav Maksimovic, 08 October 2018

The emergence of ‘superstar’ firms that achieve vastly better returns on invested capital have led to concern that some sectors are too concentrated. The column argues that this difference in returns can be accounted for by better measurement of intangible capital. These firms may not be exercising market power in ways that harm consumers in the short run, but policymakers should ensure that markets remain contestable.

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