IDEAS home Printed from https://ideas.repec.org/a/mes/jpneco/v23y1995i4p32-58.html
   My bibliography  Save this article

Bubbles in Japan's Stock Market: A Macroeconomic Analysis

Author

Listed:
  • Kazuo Sato

Abstract

Since the 1950s, Japan's stock market has gone into bubbles every ten years or so (early 1950s, early 1960s, and early 1970s). Then the 1980s saw a strong bubble that continued for several years (late 1982 to the end of 1989). What caused this bubble to be so strong? Our analysis of the fundamental equation reveals that the key factor was the nominal interest rate which continued to decline until the late 1980s owing to the extremely relaxed monetary policy pursued by the Bank of Japan. The forecasts for stock prices made by investors added to the effect of the low interest rates. We will show that investors tend to forecast fluctuations on the real side two-to three-quarters ahead of time. The bubble crashed when the forecasts of the investors collapsed. Since then investors have remained bearish and the stock market has remained in the doldrums.

Suggested Citation

  • Kazuo Sato, 1995. "Bubbles in Japan's Stock Market: A Macroeconomic Analysis," Japanese Economy, Taylor & Francis Journals, vol. 23(4), pages 32-58.
    • Handle: RePEc:mes:jpneco:v:23:y:1995:i:4:p:32-58
    DOI: 10.2753/JES1097-203X230432
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2753/JES1097-203X230432
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.2753/JES1097-203X230432?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Masih, A. Mansur M. & Masih, Rumi, 2002. "Propagative causal price transmission among international stock markets: evidence from the pre- and postglobalization period," Global Finance Journal, Elsevier, vol. 13(1), pages 63-91.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:jpneco:v:23:y:1995:i:4:p:32-58. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MJES19 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.