Japan's Stagnant Nineties: A Vector Autoregression Retrospective

Author/Editor:

Christel Rendu ; Ramana Ramaswamy

Publication Date:

April 1, 1999

Electronic Access:

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Summary:

This paper uses a vector autoregression (VAR) approach to identify the driving forces of the growth slowdown in Japan during the 1990s. Negative shocks to both residential and nonresidential investment are shown to have been important determinants of the slowdown. Despite the collapse in asset prices, negative shocks to private consumption were relatively small. A surprising conclusion is that trends in public consumption had a dampening impact on activity in the 1990s. The VAR estimations do not support the counterfactual conjecture that activity in Japan would have been significantly weaker in the absence of the expansionary shift in fiscal policy.

Series:

Working Paper No. 1999/045

Subject:

Econometric analysis Expenditure Fiscal policy National accounts Private consumption Private investment Public investment spending Vector autoregression

English

Publication Date:

April 1, 1999

ISBN/ISSN:

9781451846454/1018-5941

Stock No:

WPIEA0451999

Pages:

22

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