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Financing Japan's World War II Occupation of Southeast Asia

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  • Huff, Gregg
  • Majima, Shinobu

Abstract

This paper analyzes how Japan financed its World War II occupation of Southeast Asia, the transfer of resources to Japan, and the monetary and inflation consequences of Japanese policies. In Malaya, Burma, Indonesia and the Philippines, the issue of military scrip to pay for resources and occupying armies greatly increased money supply. Despite high inflation, hyperinflation hardly occurred because of a sustained transactions demand for money, because of Japan's strong enforcement of monetary monopoly, and because of declining Japanese military capability to ship resources home. In Thailand and Indochina, occupation costs and bilateral clearing arrangements created near open-ended Japanese purchasing power and allowed the transfer to Japan of as much as a third of Indochina's annual GDP. Although the Thai and Indochinese governments financed Japanese demands mainly by printing large quantities of money, inflation rose only in line with monetary expansion due to money's continued use as a store of value in rice-surplus areas.
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Suggested Citation

  • Huff, Gregg & Majima, Shinobu, 2013. "Financing Japan's World War II Occupation of Southeast Asia," The Journal of Economic History, Cambridge University Press, vol. 73(04), pages 937-977, December.
  • Handle: RePEc:cup:jechis:v:73:y:2013:i:04:p:937-977_00
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
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    Cited by:

    1. Kim Oosterlinck & Jeremy Simon, 2015. "Financial Repression and Bond Market Efficiency: the Case of Italy during World War II," Working Papers CEB 15-001, ULB -- Universite Libre de Bruxelles.
    2. SAITO, Makoto, 2017. "On wartime money finance in the Japanese occupied territories during the Pacific War: The case of instant reserve banks as bad central banks," Discussion Papers 2017-03, Graduate School of Economics, Hitotsubashi University.
    3. Hattori, Takahiro & Oguro, Kazumasa, 2016. "An endeavor to estimate seigniorage before the end of and immediately after the Pacific War," Journal of the Japanese and International Economies, Elsevier, vol. 41(C), pages 1-16.
    4. Gregg Huff & Gillian Huff, 2015. "Urban growth and change in 1940s Southeast Asia," Economic History Review, Economic History Society, vol. 68(2), pages 522-547, May.
    5. Bassino, Jean-Pascal & Williamson, Jeffrey G, 2015. "From Commodity Booms to Economic Miracles: Why Southeast Asian Industry Lagged Behind," CEPR Discussion Papers 10611, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • P44 - Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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