The Japanese Depression in the Interwar Period: A General Equilibrium Analysis

Hikaru Saijo

The B.E. Journal of Macroeconomics, 2008, vol. 8, issue 1, 26

Abstract: This paper studies the Japanese depression in the interwar period using the business cycle accounting methodology and a general equilibrium model with time-varying markups. I find that the initial slowdown of the economy can be explained by a decline in productivity. However, I also find that when only productivity change is taken into account, a prototype neoclassical growth model predicts that in the 1930s, output recovers more rapidly than is actually supported by the data. Using restrictions from theory, I quantify the contribution of an increase in markups in the manufacturing and mining sectors and find that a substantial fraction of the weak recovery can be explained by this factor. I argue that this increase in markups is caused by government-promoted cartelization.

Keywords: cartelization; depression; Japan; productivity (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (10)

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DOI: 10.2202/1935-1690.1614

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