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The boom and the bust of the Japanese economy: A quantitative look at the period 1980-2000

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  • Chakraborty, Suparna

Abstract

In this paper we quantitatively investigate the boom and the bust of the Japanese economy during 1980-2000 using the business cycle accounting technique. This method helps us identify the distortion margins called "wedges" that played a significant role in accounting for the output fluctuations. Applying our model to Japan, we find that efficiency and investment wedges can almost wholly account for output increases of the 1980s. Labor wedges by themselves would have caused a recession beginning in late 1980s but was overwhelmed by the positive impact of efficiency and investment wedges. In the 1990s, efficiency, labor and investment wedges all contributed to the recession. We next extend the literature by conducting robustness tests to investigate the sensitivity of BCA results to small modifications in methodology.

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  • Chakraborty, Suparna, 2009. "The boom and the bust of the Japanese economy: A quantitative look at the period 1980-2000," Japan and the World Economy, Elsevier, vol. 21(1), pages 116-131, January.
  • Handle: RePEc:eee:japwor:v:21:y:2009:i:1:p:116-131
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    Cited by:

    1. repec:liu:liucej:v:14:y:2017:i:2:p:197-219 is not listed on IDEAS
    2. Otsu, Keisuke, 2011. "Working Effort and the Japanese Business Cycle," Economic Review, Hitotsubashi University, vol. 62(1), pages 20-29, January.
    3. Florian Gerth & Keisuke Otsu, 2016. "A Post-crisis Slump in Europe: A Business Cycle Accounting Analysis," Studies in Economics 1606, School of Economics, University of Kent.
    4. Nirav Mehta, 2012. "Competition in Public School Districts: Charter School Entry, Student Sorting, and School Input Determination," 2012 Meeting Papers 42, Society for Economic Dynamics.
    5. Dooyeon Cho & Antonio Doblas-Madrid, 2013. "Business Cycle Accounting East and West: Asian Finance and the Investment Wedge," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 724-744, October.
    6. Suparna Chakraborty & Keisuke Otsu, 2012. "Deconstructing Growth - A Business Cycle Accounting Approach with application to BRICs," Studies in Economics 1212, School of Economics, University of Kent.
    7. Vasilev, Aleksandar, 2017. "Business Cycle Accounting: Bulgaria after the introduction of the currency board arrangement (1999-2014)," EconStor Open Access Articles, ZBW - German National Library of Economics.
    8. Dooyeon Cho & Dong-Eun Rhee, 2015. "An assessment of inflation targeting in a quantitative monetary business cycle framework: evidence from four early adopters," Applied Economics, Taylor & Francis Journals, vol. 47(32), pages 3395-3413, July.
    9. Keisuke Otsu, 2009. "International Business Cycle Accounting," IMES Discussion Paper Series 09-E-29, Institute for Monetary and Economic Studies, Bank of Japan.
    10. Barseghyan, Levon, 2010. "Non-performing loans, prospective bailouts, and Japan's slowdown," Journal of Monetary Economics, Elsevier, pages 873-890.
    11. Chakraborty Suparna & Otsu Keisuke, 2013. "Business cycle accounting of the BRIC economies," The B.E. Journal of Macroeconomics, De Gruyter, pages 1-33.
    12. Otsu Keisuke, 2010. "A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy," The B.E. Journal of Macroeconomics, De Gruyter, pages 1-39.
    13. Saijo Hikaru, 2008. "The Japanese Depression in the Interwar Period: A General Equilibrium Analysis," The B.E. Journal of Macroeconomics, De Gruyter, pages 1-26.
    14. Otsu Keisuke, 2010. "A Neoclassical Analysis of the Asian Crisis: Business Cycle Accounting for a Small Open Economy," The B.E. Journal of Macroeconomics, De Gruyter, pages 1-39.
    15. Taketo Kawagishi & Kazuo Mino, 2016. "Time Preference and Income Convergence in a Dynamic Heckscher–Ohlin Model," Review of International Economics, Wiley Blackwell, pages 592-603.

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