The characteristics of the business cycle in Japan

Shigeyuki Hamori and Shin-Ichi Kitasaka

Applied Economics, 1997, vol. 29, issue 9, 1105-1113

Abstract: The present study examines the characteristics of the business cycle in the Japanese economy by using the Hodrick-Prescot filter, concluding that a change in consumption is relatively large and that labour input is ficed in Japan. Fluctuating consumption supports a permanent income hypothesis in Japan. The fixed labour input is thought to reflect the characteritics of the Japanese economy, such as a fixed employment custom like the 'lifetime employment system'. This paper presents a simple-stuctured model of the real business cycle(RBC) and examines its validity by simulation. It may be concluded that even a simple model with a time-separable utitlity function and a fixed capital-labour ratio can reproduce the movement of the Japanese economy.

Date: 1997
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DOI: 10.1080/00036849700000001

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