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Financing Japan's World War II Occupation of Southeast Asia

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  • Gregg Huff

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.

Suggested Citation

  • Gregg Huff, 2012. "Financing Japan's World War II Occupation of Southeast Asia," Economics Series Working Papers Number 109, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:number-109
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    File URL: http://www.economics.ox.ac.uk/materials/papers/12457/huffmajima109.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Jean-Pascal Bassino & Jeffrey G. Williamson, 2015. "From Commodity Booms to Economic Miracles: Why Southeast Asian Industry Lagged Behind," UP School of Economics Discussion Papers 201507, University of the Philippines School of Economics.
    3. 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.
    4. 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.
    5. 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.

    More about this item

    Keywords

    War; Financial and macroeconomic crises; Resource transfer; Occupation costs; Bilateral clearing arrangements; Seigniorage; Hyperinflation; Greater East Asia Co-Prosperity;

    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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