Japan's Lost Decade: Does Money have a Role?

Fabio Canova and Tobias Menz

No 7608, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the contribution of the stock of money to the macroeconomic outcomes of the 1990s in Japan using a small scale structural model. Likelihood-based estimates of the parameters are provided and time stabilities of the structural relationships analyzed. Real balances are statistically important for output and inflation fluctuations and their role has changed over time. Models which give money no role give a distorted representation of the sources of cyclical fluctuations. The severe stagnation and the long deflation are driven by different causes.

Keywords: Japan's lost decade; Deflation; Money; Structural model (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac and nep-mon
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Related works:
Chapter: Japan's Lost Decade: Does Money Have a Role? (2010)
Journal Article: Japan's Lost decade: Does money have a role? (2010)
Working Paper: Japan's lost decade: Does money have a role? (2009)
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