Japanese growth and stagnation: a Keynesian perspective

Peter Skott () and Takeshi Nakatani ()
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Takeshi Nakatani: Kobe University

Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: This paper uses a modified Harrodian model to understand both the long period of rapid Japanese growth and the recent period of stagnation. The model has multiple steady-growth solutions when the labour supply is highly elastic, and government intervention, we argue, took the Japanese economy onto a high-growth trajectory. Labour constraints began to ap- pear around 1970, and a combination of high saving rates and slow popu- lation growth account for the stagnation of the 1990s. This combination produces a structural liquidity trap and threatens the sustainability of at- tempts to ensure near full employment through fiscal policy or by running a persistent trade surplus. JEL Categories: E12, E63, O53

Keywords: Japan; growth; stagnation; liquidity trap; public debt; multiple equilibria (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-sea
Date: 2006-02
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Journal Article: Japanese growth and stagnation: A Keynesian perspective (2007)
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