The Morning After: Explaining the Slowdown in Japanese Growth in the 1990's

Tamim Bayoumi

No 1999/013, IMF Working Papers from International Monetary Fund

Abstract: This paper uses vector autoregressions (VARs) to investigate four explanations of the extended slump in Japanese economic activity during the 1990s: the absence of bold and consistent fiscal stimulus; limited room for expansionary monetary policy because of a liquidity trap; asset price deflation reflecting the long-term problems caused by overinvestment, inadequate returns on saving, and debt overhang; and disruption of financial intermediation. The results indicate that disruption in financial intermediation, largely operating through the impact of changes in domestic asset prices on bank lending, has been the principal case of the slump.

Keywords: WP; asset; fiscal policy; lending; slump; levels terms; Economic slump; financial intermediation; tax hike; share price; asset price effect; asset deflation; rate of return; household assets; asset price change; stimulus package; lending constraint; innovations in asset price; Exogenizing land price; Asset prices; Bank credit; Land prices; Real interest rates; Asia and Pacific (search for similar items in EconPapers)
Pages: 37
Date: 1999-01-01
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: The morning after: explaining the slowdown in Japanese growth in the 1990s (2001)
Working Paper: The Morning After: Explaining The Slowdown In Japanese Growth In The 1990s (2000)
Working Paper: The Morning After: Explaining the Slowdown in Japanese Growth in the 1990s (1999)
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