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On the Role of Policy Interventions in Structural Change and Economic Development: The Case of Postwar Japan

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  • Julen ESTEBAN-PRETEL
  • SAWADA Yasuyuki

Abstract

In this paper, we study the structural change occurring in Japan's post-World War II era of rapid economic growth. We use a two-sector neoclassical growth model with government policies to analyze the evolution of the Japanese economy in this period and to assess the role of such policies. Our model is able to replicate the empirical behavior of the main macroeconomic variables. Three findings emerge from our policy analysis. First, neither price and investment subsidies to the agricultural sector, nor industrial policy play a crucial role in the rapid postwar growth. Second, while a government subsidy for families in urban areas could have facilitated migration from the agricultural to the non-agricultural sector, such a policy would not have improved the overall performance of the Japanese economy. Finally, had there existed a labor migration barrier, the negative long-run level effect on output would have been substantial.

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Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 09001.

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Length: 28 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:eti:dpaper:09001

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Citations

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Cited by:
  1. Aoki, Shuhei, 2008. "A Simple Accounting Framework for the Effect of Resource Misallocation on Aggregate Productivity," MPRA Paper 11511, University Library of Munich, Germany.
  2. Aoki, Shuhei, 2011. "A Model of Technology Transfer in Japan's Rapid Economic Growth Period," MPRA Paper 29235, University Library of Munich, Germany.
  3. Shuhei Aoki & Julen Esteban-Pretel & Tetsuji Okazaki & Yasuyuki Sawada, 2009. "The Role of the Government in Facilitating TFP Growth during Japan's Rapid Growth Era," CIRJE F-Series CIRJE-F-622, CIRJE, Faculty of Economics, University of Tokyo.
  4. Naohisa Hirakata & Takeki Sunakawa, 2013. "Financial Frictions, Capital Misallocation, and Structural Change," IMES Discussion Paper Series 13-E-06, Institute for Monetary and Economic Studies, Bank of Japan.
  5. MIYAZAWA Kensuke, 2011. "Measuring Human Capital in Japan," Discussion papers 11037, Research Institute of Economy, Trade and Industry (RIETI).

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