Overview
The Economic and Social Research Institute published "Economic Analysis No. 210 (Special Planning Issue) - Feature: Future Prospects Using New Long-term Projection Models" in July 2025, a collection of papers on the development and application of new models for analyzing ultra-long-term future prospects of the Japanese economy.
This issue features the results of new model development that enables ultra-long-term economic analysis, moving from conventional short- and medium-term analysis-focused models to address long-term challenges facing the Japanese economy including population decline, technological innovation, and climate change.
This comprehensive overview presents new analytical tools essential for addressing long-term challenges such as population decline and technological innovation. The issue emphasizes the importance of two approaches: DSGE models with endogenized technological growth and System Dynamics.
Key findings include:
- R&D efficiency improvements may cause short-term production slowdowns but bring long-term sustainable economic growth
- If the birth rate stagnates at 1.3, ultra-long-term economic growth rate could be reduced by approximately 2.1 percentage points
- Innovation promotion policies could boost growth rates by approximately 1.5 percentage points
- Japan's population projections range from 130 million to 40 million by 2100, with GDP ranging from $20 trillion to $3.0 trillion
The papers highlight the need for strategic investment in human capital formation, early renewable energy expansion, and institutional mechanisms for effective policy coordination. These new long-term projection models are expected to make important contributions to policy planning for sustainable growth of the Japanese economy.
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The Economic and Social Research Institute published "Economic Analysis No. 210 (Special Planning Issue) - Feature: Future Prospects Using New Long-term Projection Models" in July 2025, a collection of papers on the development and application of new models for analyzing ultra-long-term future prospects of the Japanese economy.
This issue features the results of new model development that enables ultra-long-term economic analysis, moving from conventional short- and medium-term analysis-focused models to address long-term challenges facing the Japanese economy including population decline, technological innovation, and climate change.
This comprehensive overview presents new analytical tools essential for addressing long-term challenges such as population decline and technological innovation. The issue emphasizes the importance of two approaches: DSGE models with endogenized technological growth and System Dynamics.
Key findings include:
- R&D efficiency improvements may cause short-term production slowdowns but bring long-term sustainable economic growth
- If the birth rate stagnates at 1.3, ultra-long-term economic growth rate could be reduced by approximately 2.1 percentage points
- Innovation promotion policies could boost growth rates by approximately 1.5 percentage points
- Japan's population projections range from 130 million to 40 million by 2100, with GDP ranging from $20 trillion to $3.0 trillion
The papers highlight the need for strategic investment in human capital formation, early renewable energy expansion, and institutional mechanisms for effective policy coordination. These new long-term projection models are expected to make important contributions to policy planning for sustainable growth of the Japanese economy.