Exchange Rate Economic Recovery of Japan in the 1930s

Masanori Okura and Juro Teranishi

Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper investigates why Japan's recovery from the depression of the early 1930s was so quick.A simple macromodel is constructed and carefully estimated. A dynamic simulation analysis is conducted in order to evalute various causes of recorvery. It is found that the recovery of Japan owed mainly to both deficit spending and expansion of exports, while the contirubution of a rise in profit rate (fall in real wage) or low interest rate policy is rather marginal. The expansion of exports was ignited by exchange rate depreciation, but its sustained growth was due to development of markets in colonial and semi-colonial regions based on capital exports from Japan.

Date: 1992-10
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hituec:a263

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