June 30, 2020 Bank of Japan

Since the beginning of fiscal year 2020, the Bank of Japan has temporarily ceased its on-site examinations with the financial institutions that hold current accounts at the Bank (hereafter referred to as examinee institutions), with a view to preventing the spread of COVID-19 and reducing the operational burdens on examinee institutions striving to provide financing support to corporates and households.

Although the Declaration of the State of Emergency was lifted nationwide on May 25, the Bank in principle will not conduct on-site examinations until it judges it appropriate to resume them, based on observations such as improved infection containment and reduced operational burdens of examinee institutions' financing support.

Until the resumption of on-site examinations, the Bank will conduct intensive interviews with examinee institutions through web and telephone conferences in place of such examinations. Based on risk...

The relative-price approach to identifying investment-specific technology shocks is inconsistent with a two-sector model with permanent markup change, consumption-specific technology, or sector-specific factor shares. This paper proposes a new approach by finding the model's long-run properties that link labor productivity and the relative price of investment to sector-specific technology change and nontechnology change and by developing a new Max Share identification strategy to exploit these properties. The identified shocks play a large role in both short- and long-run economic fluctuations. This paper also highlights the implications of a broadly overlooked identity between TFP and aggregate sectoral technology.

Keywords: investment-specific technology; total factor productivity; labor productivity; relative price of investment; structural vector autoregression; Max Share