Bubble Expectations and Economic Growth in Japan

Ryo Jinnai, Satoshi Tsuchida and Yohei Yamamoto

Economic Review, 2024, vol. 75, issue 1, 6-6

Abstract: This study offers a new perspective on Japan’s “lost decades.” We first argue that, even after the collapse of the Heisei bubble, the revival of a bubble economy is not always a remote possibility, but is occasionally even considered likely. We further argue that, theoretically, expectations of future bubbles generate a crowding-out effect on investments. Based on these observations, we argue that this crowding-out effect emanating from bubble expectations may have been a headwind to economic growth during the lost decades.

JEL-codes: E44 G12 O40 (search for similar items in EconPapers)
Date: 2024
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