Efficacy of Fiscal Policy in Japan: Keynesian and Non-Keynesian Effects on Aggregate Demand
There are two ways of analyzing the efficacy of fiscal policy: the VAR approach and the nonlinear approach. The important difference between them is that the former assumes a linear effect of fiscal policy whereas the latter assumes a nonlinear effect. However, it has never been tested whether the effect is linear or nonlinear. This should first be confirmed so that the efficacy of fiscal policy can be evaluated precisely. This paper examines whether Japanese fiscal policy is effective, and whether the effect is linear or nonlinear. Our results reveal that an increase in government expenditure causes a decrease in private consumption when the government debt/GDP ratio is high, whereas when the ratio is low, it has a positive effect. Our results support the nonlinear effect, and indicate that an increase in government expenditure had a Keynesian effect before around 1998, but after that, it had a non-Keynesian effect.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Nov 2007|
|Date of revision:|
|Contact details of provider:|| Postal: 2-1 Rokkodai, Nada, Kobe 657-8501 JAPAN|
Phone: +81-(0)78 803 7036
Fax: +81-(0)78 803 7059
Web page: http://www.rieb.kobe-u.ac.jp/index-e.html
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:kob:dpaper:212. 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: (Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University)
If references are entirely missing, you can add them using this form.