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Public investment and business cycles: The case of Japan

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  • Miyazaki, Tomomi

Abstract

This paper examines the effect of public investment on macroeconomic fluctuations in Japan by comparing the effects of central and local government investments. Impulse response functions show that central government investments slightly but persistently stimulate industrial production, while local government investments have no positive impact on business cycles. In terms of policy effectiveness, these results suggest that the Japanese government should not employ local public sector investments as a policy instrument for economic stabilization.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 20 (2009)
Issue (Month): 4 (September)
Pages: 419-426

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Handle: RePEc:eee:asieco:v:20:y:2009:i:4:p:419-426

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Related research

Keywords: Public investment Stabilization policy in Japan Structural vector auto regression;

References

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  5. Stephen G. Cecchetti & Georgios Karras, 1992. "Sources of Output Fluctuations During the Interwar Period: Further Evidence on the Causes of the Great Depression," NBER Working Papers 4049, National Bureau of Economic Research, Inc.
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  7. Asako, Kazumi & Ito, Takatoshi & Sakamoto, Kazunori, 1991. "The rise and fall of deficit in Japan, 1965-1990," Journal of the Japanese and International Economies, Elsevier, vol. 5(4), pages 451-472, December.
  8. Lawrence J. Christiano, 1986. "Money and the U.S. economy in the 1980s: a break from the past?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 2-13.
  9. Takero Doi & Toshihiro Ihori, 2006. "Soft-Budget Constraints and Local Expenditures," CIRJE F-Series CIRJE-F-422, CIRJE, Faculty of Economics, University of Tokyo.
  10. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
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  12. Perotti, Roberto, 2005. "Estimating the Effects of Fiscal Policy in OECD Countries," CEPR Discussion Papers 4842, C.E.P.R. Discussion Papers.
  13. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-44, January.
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Cited by:
  1. Anita Tuladhar & Markus Bruckner, 2010. "Public Investment As a Fiscal Stimulus," IMF Working Papers 10/110, International Monetary Fund.
  2. Miyazaki, Tomomi, 2013. "Fiscal Policy and Regional Business Cycle Fluctuations in Japan," Discussion Paper Series 583, Institute of Economic Research, Hitotsubashi University.

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