IDEAS home Printed from https://ideas.repec.org/p/cnn/wpaper/13-006e.html
   My bibliography  Save this paper

Dynamic Effects of Fiscal Policy in Japan: Evidence from a Structural VAR with Sign Restrictions

Author

Listed:
  • Kensuke Miyazawa
  • Kengo Nutahara

Abstract

In this paper, we employ structural vector autoregression (VAR) with sign restrictions to identify the dynamic effects of fiscal policy shocks in Japan. We find that (i) an increase in government spending has positive effects on consumption and wages in the short run, but these effects are not persistent, and the effects on GDP are almost zero. We also find, surprisingly, that (ii) an increase in government revenue has significant positive effects on GDP, consumption, and investment in the medium and long run although it has negative effects in the short run. Finally, (iii) the balanced-budget spending policy scenario is better than deficit-spending and deficit-financed tax-cut policy scenarios.

Suggested Citation

  • Kensuke Miyazawa & Kengo Nutahara, 2013. "Dynamic Effects of Fiscal Policy in Japan: Evidence from a Structural VAR with Sign Restrictions," CIGS Working Paper Series 13-006E, The Canon Institute for Global Studies.
  • Handle: RePEc:cnn:wpaper:13-006e
    as

    Download full text from publisher

    File URL: http://www.canon-igs.org/research_papers/131112_nutahara_WP006E.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Braun, R. Anton & Shioji, Etsuro, 2006. "Monetary Policy and the Term Structure of Interest Rates in Japan," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(1), pages 141-162, February.
    2. Kenneth N. Kuttner & Adam S. Posen, 2001. "The Great Recession: Lessons for Macroeconomic Policy from Japan," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 93-186.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nutahara, Kengo, 2015. "Laffer curves in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 36(C), pages 56-72.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cnn:wpaper:13-006e. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (The Canon Institute for Global Studies). General contact details of provider: http://edirc.repec.org/data/canonjp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.