The Morning After: Explaining the Slowdown in Japanese Growth in the 1990's

January 1, 1999

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Tamim Bayoumi. The Morning After: Explaining the Slowdown in Japanese Growth in the 1990's, (USA: International Monetary Fund, 1999) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper uses vector autoregressions (VARs) to investigate four explanations of the extended slump in Japanese economic activity during the 1990s: the absence of bold and consistent fiscal stimulus; limited room for expansionary monetary policy because of a liquidity trap; asset price deflation reflecting the long-term problems caused by overinvestment, inadequate returns on saving, and debt overhang; and disruption of financial intermediation. The results indicate that disruption in financial intermediation, largely operating through the impact of changes in domestic asset prices on bank lending, has been the principal case of the slump.

Subject: Asset prices, Bank credit, Expenditure, Financial services, Land prices, Money, Prices, Real interest rates

Keywords: Asia and Pacific, Asset, Asset deflation, Asset price change, Asset price effect, Asset prices, Bank credit, Economic slump, Exogenizing land price, Financial intermediation, Fiscal policy, Household assets, Innovations in asset price, Land prices, Lending, Lending constraint, Levels terms, Rate of return, Real interest rates, Share price, Slump, Stimulus package, Tax hike, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/013
Stock No:

WPIEA0131999
ISBN:

9781451842982
ISSN:

1018-5941

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