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Japanese growth and stagnation: a Keynesian perspective

  • Peter Skott

    ()

    (University of Massachusetts Amherst)

  • Takeshi Nakatani

    ()

    (Kobe University)

This paper uses a modified Harrodian model to understand both the long period of rapid Japanese growth and the recent period of stagnation. The model has multiple steady-growth solutions when the labour supply is highly elastic, and government intervention, we argue, took the Japanese economy onto a high-growth trajectory. Labour constraints began to ap- pear around 1970, and a combination of high saving rates and slow popu- lation growth account for the stagnation of the 1990s. This combination produces a structural liquidity trap and threatens the sustainability of at- tempts to ensure near full employment through fiscal policy or by running a persistent trade surplus. JEL Categories: E12, E63, O53

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Paper provided by University of Massachusetts Amherst, Department of Economics in its series UMASS Amherst Economics Working Papers with number 2006-04.

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Date of creation: Feb 2006
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Handle: RePEc:ums:papers:2006-04
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  1. Schlicht, Ekkehart, 2008. "Public Debt as Private Wealth," Munich Reprints in Economics 2143, University of Munich, Department of Economics.
  2. Peter Skott & Peter Flaschel, 2004. "Steindlian Models of Growth and Stagnation," UMASS Amherst Economics Working Papers 2004-11, University of Massachusetts Amherst, Department of Economics.
  3. Taylor, Lance, 1985. "A Stagnationist Model of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 9(4), pages 383-403, December.
  4. Skott, Peter, 1989. "Effective Demand, Class Struggle and Cyclical Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(1), pages 231-47, February.
  5. Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
  6. Fumio Hayashi & Edward C. Prescott, 2002. "Data Appendix to The 1990s in Japan: A Lost Decade," Technical Appendices hayashi02, Review of Economic Dynamics.
  7. Skott, Peter, . "Fairness as a source of hysteresis in employment and relative wages," Economics Working Papers 2003-6, School of Economics and Management, University of Aarhus.
  8. repec:cup:cbooks:9780521365963 is not listed on IDEAS
  9. Anonymous, 1978. "Introduction [Commerce et Technologie]," Canadian Public Policy, University of Toronto Press, vol. 4(1), pages 2-3, Winter.
  10. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
  11. Morana, Claudio, 2004. "The Japanese stagnation: an assessment of the productivity slowdown hypothesis," Japan and the World Economy, Elsevier, vol. 16(2), pages 193-211, April.
  12. Ekkehart Schlicht, 2006. "Public Debt As Private Wealth: Some Equilibrium Considerations," Metroeconomica, Wiley Blackwell, vol. 57(4), pages 494-520, November.
  13. Anonymous, 1978. "Introduction [Trade and Technology]," Canadian Public Policy, University of Toronto Press, vol. 4(1), pages 1-2, Winter.
  14. Daniel Levy & Mark Bergen & Shantanu Dutta & Robert Venable, 2005. "The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains," Macroeconomics 0505012, EconWPA.
  15. Peter Skott, . "Demand Policy in the Long Run," Economics Working Papers 2000-17, School of Economics and Management, University of Aarhus.
  16. 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.
  17. James M. Poterba, 1987. "Tax Policy and Corporate Saving," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 455-516.
  18. Cowling, Keith & Tomlinson, Philip R, 2000. "The Japanese Crisis--A Case of Strategic Failure?," Economic Journal, Royal Economic Society, vol. 110(464), pages F358-81, June.
  19. Skott, Peter, 1981. "On the 'Kaldorian' Saving Function," Kyklos, Wiley Blackwell, vol. 34(4), pages 563-81.
  20. Skott, Peter, 1997. "Stagflationary Consequences of Prudent Monetary Policy in a Unionized Economy," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 609-22, October.
  21. Amitava Krishna Dutt & Peter Skott, 1996. "Keynesian Theory and the Aggregate-Supply/Aggregate-Demand Framework: A Defense," Eastern Economic Journal, Eastern Economic Association, vol. 22(3), pages 313-331, Summer.
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