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Japanese Economic Stagnation: Causes and Global Implications

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  • ROD TYERS

Abstract

Despite Japan’s prominence in global finance and trade through the 1980s its global role has appeared to diminish with its recent stagnation and the rise of China. This paper reviews the claimed sources of Japan’s stagnation, including productivity and labour slowdowns, monetary policy in the aftermath of the Plaza Accord and the surge in China’s growth. Their independent effects are quantified using a multi-region global dynamic model. The productivity slowdown emerges strongest though its exogeneity is questioned. The resulting losses are shown to have been severe for the Japanese but mild in other regions, disguised by the rise of China.
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Suggested Citation

  • Rod Tyers, 2012. "Japanese Economic Stagnation: Causes and Global Implications," The Economic Record, The Economic Society of Australia, vol. 88(283), pages 517-536, December.
    • Handle: RePEc:bla:ecorec:v:88:y:2012:i:283:p:517-536
    DOI: 10.1111/ecor.2012.88.issue-283
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    1. Ippei Fujiwara & Keisuke Otsu & Masashi Saito, 2008. "The Global Impact of Chinese Growth," IMES Discussion Paper Series 08-E-22, Institute for Monetary and Economic Studies, Bank of Japan.
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    9. Peter E Robertson & Jessica Y Xu, 2010. "In China's Wake: Has Asia Gained From China's Growth?," Economics Discussion / Working Papers 10-15, The University of Western Australia, Department of Economics.
    10. 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.
    11. Aloy, Marcel & Gente, Karine, 2009. "The role of demography in the long-run Yen/USD real exchange rate appreciation," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 654-667, December.
    12. Ianchovichina,Elena & Walmsley,Terrie L. (ed.), 2012. "Dynamic Modeling and Applications for Global Economic Analysis," Cambridge Books, Cambridge University Press, number 9781107011694, October.
    13. Rod Tyers & Iain Bain, 2008. "American and European Financial Shocks: Implications for Chinese Economic Performance," ANU Working Papers in Economics and Econometrics 2008-491, Australian National University, College of Business and Economics, School of Economics.
    14. Liu, Jing & van Leeuwen, Nico & Vo, Tri Thanh & Tyers, Rodney & Hertel, Thomas W., 1998. "Disaggregating Labor Payments By Skill Level In Gtap," Technical Papers 28722, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Jane Golley & Rod Tyers, 2011. "Contrasting Giants: Demographic Change and Economic Performance in China and India," Economics Discussion / Working Papers 11-04, The University of Western Australia, Department of Economics.
    16. C. Randall Henning, 2008. "Accountability and Oversight of US Exchange Rate Policy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4198.
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    19. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Risk," ANU Working Papers in Economics and Econometrics 2006-461, Australian National University, College of Business and Economics, School of Economics.
    20. Peter B. Dixon & Maureen T. Rimmer, 2004. "The US Economy from 1992 to 1998: Results from a Detailed CGE Model," The Economic Record, The Economic Society of Australia, vol. 80(s1), pages 13-23, September.
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    Cited by:

    1. Paul Beaudry & Franck Portier, 2014. "News-Driven Business Cycles: Insights and Challenges," Journal of Economic Literature, American Economic Association, vol. 52(4), pages 993-1074, December.
    2. Tyers, Rod, 2015. "International effects of China's rise and transition: Neoclassical and Keynesian perspectives," Journal of Asian Economics, Elsevier, vol. 37(C), pages 1-19.
    3. Prayudhi Azwar & Rod Tyers, 2015. "Indonesian Macro Policy through Two Crises," CAMA Working Papers 2015-16, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    4. Rod Tyers, 2014. "Pessimism Shocks in a Model of Global Macroeconomic Interdependence," Economics Discussion / Working Papers 14-28, The University of Western Australia, Department of Economics.
    5. Tyers, Rod, 2014. "Looking inward for transformative growth," China Economic Review, Elsevier, vol. 29(C), pages 166-184.
    6. 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.
    7. repec:bla:ecorec:v:93:y:2017:i:303:p:615-650 is not listed on IDEAS
    8. Akihito Asano & Rod Tyers, 2015. "Third Arrow Reforms and Japan’s Economic Performance," Economics Discussion / Working Papers 15-17, The University of Western Australia, Department of Economics.
    9. Rod Tyers, 2013. "A Simple Model to Study Global Macroeconomic Interdependence," Economics Discussion / Working Papers 13-23, The University of Western Australia, Department of Economics.
    10. Rod Tyers & Ying Zhang & Tsun Se Cheong, 2013. "China’s Saving and Global Economic Performance," Economics Discussion / Working Papers 13-20, The University of Western Australia, Department of Economics.
    11. Vipin Arora & Rod Tyers & Ying Zhang, 2014. "Reconstructing the Savings Glut: The Global Implications of Asian Excess Saving," Economics Discussion / Working Papers 14-24, The University of Western Australia, Department of Economics.
    12. 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.

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