Causes of the Long Stagnation of Japan during the 1990 fs: Financial or Real?

Taizo Motonishi and Hiroshi Yoshikawa
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Hiroshi Yoshikawa: Faculty of Economics, University of Tokyo

No CIRJE-F-56, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: Corporate investment is the most important factor to explain the long stagnation of Japan during the 1990's. Using the Bank of Japan diffusion indices of 'real profitability' and 'banks' willingness to lend', we estimate investment functions for four groups of firms: large/small and manufacturing/non-manufacturing. Our results suggest that for large firms, financing constraints are not significant whereas the converse is true for small firms. A fall of investment during 1992-94 is largely explained by real factors. However, the credit crunch occurred beginning 1997 and it lowered the growth rate of GDP by 1.6%.

Pages: 44pages
Date: 1999-08
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: Causes of the Long Stagnation of Japan during the 1990s: Financial or Real? (1999)
Working Paper: Causes of the Long Stagnation of Japan During the 1990s: Financial or Real? (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:99cf56

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