Macroeconomic analysis of cloud computing in Japan

Cloud computing is becoming one of the major technological changes for business management in the last decade. From internal management to supply chain management, various services can be provided by cloud providers that locate somewhere in the world. However, despite its pervasive impact on business and economy, its understanding on the effect on economy is still in early stage. On the other hand, macroeconomic analysis with micro-foundation such as dynamic stochastic general equilibrium (DSGE) approach is heavily concentrated on financial and monetary analysis. This study fills in this gap and tries to construct macroeconomic model that incorporates specific technological change such as cloud computing. By the presented model, this paper tries to understand the impact of the diffusion of cloud computing comprehensively. 1. Background Cloud computing has become one of the major topics among the information technology architecture. Cloud computing provides information services from centralized data centers so that firms do not need to invest in and own a huge computer resources. General consumers also benefit from cloud computing such as online storage. However, business sector started to use cloud services more thoroughly. For example, information technology services for email, human resource management, supply chain management, customer relationship management are now provided by cloud vendors. These new types of services are penetrating rapidly in Japanese economy. IPA (2012) shows that use rate of SaaS (Software as a Service, one of the service models of cloud computing) has grown from 19.5% in 2010 to 33.7% in 2011. Information technology is referred as “General Purpose Technology” because it improves various aspects of business and products. Cloud computing reduce fixed cost to utilize information technology drastically for firms, so it is expected to promote economic growth when wider range of firms can benefit from IT that otherwise was not affordable. On the other hand, cloud computing is possible to be provided from anywhere in the world. In other 1 Ph.D Candidate, Graduate School of Interdisciplinary Information Studies, The University of Tokyo 2 Graduate School of Interdisciplinary Information Studies, The University of Tokyo *Corresponding author. Email: [email protected]