Can IT be Japan's savior?
This paper constructs a multi-sector model to take explicit account of the very sharp change in the relative price between non-IT and IT goods. The model is calibrated to the Japanese economy, and its solution path from 1990 on is compared to Japan's macroeconomic performance in the 1990s. Compared to the one-sector analysis of Japan in the 1990s in Hayashi and Prescott (2002), our model does slightly better or just as well in accounting for Japan's output slump and does worse in accounting for the capital-output ratio. We also show that, to revive a 2% long-term growth in percapita GDP, Japan needs to direct 10% of private total hours to the IT sector.
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Volume (Year): 19 (2005)
Issue (Month): 4 (December)
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- Fumio Hayashi & Edward C. Prescott, 2002.
"Data Appendix to The 1990s in Japan: A Lost Decade,"
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- Fumio Hayashi & Edward C. Prescott, 2000.
"The 1990s in Japan: a lost decade,"
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- Fumio Hayashi & Edward C. Prescott, 2002. "The 1990s in Japan: A Lost Decade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 206-235, January.
- Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters, in: The Economics of an Ageing Population, chapter 2 Edward Elgar Publishing.
- Jorgenson, Dale W. & Nomura, Koji, 2005.
"The industry origins of Japanese economic growth,"
Journal of the Japanese and International Economies,
Elsevier, vol. 19(4), pages 482-542, December.
- Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
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