A CGE Analysis of the Potential Impact of Information Technology on the Japanese Economy

Abstract

In this paper we investigate the potential system-wide impact of information technology on the Japanese economy using a static computable general equilibrium model with base case calibrated for the year 1995. The information technology has two potential impacts: (1) it enhances the labour productivity, and (2) e-commerce improves the efficiency of marketing and reduces the cost of marketing, typically referred as "marketing margins" in the literature. There is a growing interest among policy makers in the impact of information technology on Japanese economy. The effect of e-commerce on the economy is through reduction in cost of B-to-B and B-to-C transactions. An existing estimate of the red..