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Monetary and international factors behind Japan's lost decade

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  • Hamada, Koichi
  • Okada, Yasushi

Abstract

Most studies on Japan's "lost decade" have been broadly focused on its real and domestic aspects, such as total factory productivity (TPF), growth decline, non-performing loans, and governance. This paper shows that monetary and international factors played as an equally important role as those non-monetary and domestic factors in generating the prolonged Japan's stagnation. The Plaza Accord in 1985 managed to alter the major exchange rates mainly by verbal promises combined with coordinated monetary policies, and triggered the trend for the stronger real exchange rate of the yen. The subsequent monetary exchange rate policy kept the real exchanged greatly overvalued. Japanese industries endured a heavy burden during this period. J. Japanese Int. Economies 23 (2) (2009) 200-219.

Suggested Citation

  • Hamada, Koichi & Okada, Yasushi, 2009. "Monetary and international factors behind Japan's lost decade," Journal of the Japanese and International Economies, Elsevier, vol. 23(2), pages 200-219, June.
    • Handle: RePEc:eee:jjieco:v:23:y:2009:i:2:p:200-219
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    Cited by:

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    2. Duo Qin & Xinhua He & Yimeng Liu, 2010. "Exchange Rate Misalignments: Historical Experience of Japan, Germany, Singapore and Taiwan Compared to China Today," Working Papers 667, Queen Mary University of London, School of Economics and Finance.
    3. Ansgar Belke & Ulrich Volz, 2020. "The Yen Exchange Rate and the Hollowing Out of the Japanese Industry," Open Economies Review, Springer, vol. 31(2), pages 371-406, April.
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    5. Dekle, Robert & Hamada, Koichi, 2015. "Japanese monetary policy and international spillovers," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 175-199.
    6. Atsuo Utaka, 2014. "Consumer Confidence and the Japanese Economy -Comparison of Pre- and Post-Bubble Period-," Economics Bulletin, AccessEcon, vol. 34(2), pages 1165-1173.
    7. Dai, Meixing, 2011. "Motivations and strategies for a real revaluation of the Yuan," MPRA Paper 30440, University Library of Munich, Germany.
    8. Tyers, Rod, 2014. "Looking inward for transformative growth," China Economic Review, Elsevier, vol. 29(C), pages 166-184.
    9. Fujii, Hidemichi & Managi, Shunsuke, 2016. "Research and development strategy for environmental technology in Japan: A comparative study of the private and public sectors," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 293-302.
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    11. Meixing Dai, 2013. "In search of an optimal strategy for yuan’s real revaluation," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(1), pages 29-46, February.
    12. Duo Qin & Xinhua He & Yimeng Liu, 2010. "Exchange Rate Misalignments: Historical Experience of Japan, Germany, Singapore and Taiwan Compared to China Today," Working Papers 667, Queen Mary University of London, School of Economics and Finance.
    13. Dale W. JORGENSON & NOMURA Koji & Jon D. SAMUELS, 2015. "A Half Century of Trans-Pacific Competition: Price level indices and productivity gaps for Japanese and U.S. industries, 1955-2012," Discussion papers 15054, Research Institute of Economy, Trade and Industry (RIETI).
    14. Cohen, Benjamin J., 2014. "Will History Repeat Itself? Lessons for the Yuan," ADBI Working Papers 453, Asian Development Bank Institute.
    15. Masahiro Kawai & Peter Morgan, 2013. "Banking Crises and “Japanization†: Origins and Implications," Governance Working Papers 23509, East Asian Bureau of Economic Research.
    16. Rod Tyers & Ying Zhang, 2011. "Japan’s Economic Recovery: Insights from Multi-Region Dynamics," CAMA Working Papers 2011-18, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
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    18. Grace Taylor & Rod Tyers, 2017. "Secular Stagnation: Determinants and Consequences for Australia," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 615-650, December.
    19. FUKAO Kyoji & IKEUCHI Kenta & KWON Hyeog Ug & YoungGak KIM & MAKINO Tatsuji & TAKIZAWA Miho, 2015. "Lessons from Japan's Secular Stagnation," Discussion papers 15124, Research Institute of Economy, Trade and Industry (RIETI).
    20. Andrea Fracasso, 2015. "Economic Rebalancing and Growth: the Japanese experience and China’s prospects," DEM Discussion Papers 2015/07, Department of Economics and Management.
    21. Xinhua He & Duo Qin & Yimeng Liu, 2012. "Exchange rate misalignments: a comparison of China today against recent historical experiences of Japan, Germany, Singapore and Taiwan," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(3), pages 247-266, May.
    22. Kawai, Masahiro & Morgan, Peter, 2013. "Banking Crises and “Japanization”: Origins and Implications," ADBI Working Papers 430, Asian Development Bank Institute.
    23. Rod Tyers, 2012. "Looking Inward for Transformative Growth in China," CAMA Working Papers 2012-15, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    24. W Max Corden & Sisira Jayasuriya, 2016. "The Japanese macroeconomic mystery," Departmental Working Papers 2016-03, The Australian National University, Arndt-Corden Department of Economics.
    25. Xinhua He & Duo Qin & Yimeng Liu, 2012. "Exchange rate misalignments: a comparison of China today against recent historical experiences of Japan, Germany, Singapore and Taiwan," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(3), pages 247-266, May.

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