Appended Note 2-3 Expected Growth Rate and Actual Growth Rate

Appended Note 2-3Expected Growth Rate and Actual Growth Rate The influence of expected growth rate on business investment was estimated as follows:

(a) Estimate equation: Iit=i+EYit+CFit (estimated by business panel)

I:Growth rate of actual business investment (business investment based on Financial Statements Statistics of Corporations by Industry, Quarterly, Ministry of Finance, was converted to real terms by business investment deflator)

EY:Real growth forecasts for demand over the next one year (three years, or five years) (expected real growth rate for demand based on Questionnaire Concerning Corporate Activities, Cabinet Office)

CF:Real growth rate of cash flow (nominal cash flow obtained by calculating "ordinary profit / 2 + depreciation expense" (Financial Statements Statistics of Corporations by Industry, Quarterly, Ministry of Finance) was converted to real terms by GDP deflator)

(b) Estimate results (estimate period was from FY 1986 to FY 2000)