The Morning After: Explaining the Slowdown in Japanese Growth in the 1990's
January 1, 1999
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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
Pages:
37
Volume:
1999
DOI:
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Issue:
013
Series:
Working Paper No. 1999/013
Stock No:
WPIEA0131999
ISBN:
9781451842982
ISSN:
1018-5941
