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Title: The Morning After: Explaining The Slowdown In Japanese Growth In The 1990s

Author(s): Tamim Bayoumi

Publication Date: April 2000

Keyword(s): Economic Slump and Financial Intermediation

Programme Area(s): International Macroeconomics

Abstract: This paper uses a VAR to investigate four possible explanations of the extended slump in Japanese economic activity over the 1990s: the absence of bold and consistent fiscal stimulus; the limited room for expansionary monetary policy due to a liquidity trap; overinvestment and debt overhang; and disruption of financial intermediation. The results indicate that all of these factors played a role, but that the major explanation is disruption in financial intermediation, largely operating through the impact of changes in domestic asset prices on bank lending.

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Bibliographic Reference

Bayoumi, T. 2000. 'The Morning After: Explaining The Slowdown In Japanese Growth In The 1990s'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2436