NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Morning After: Explaining the Slowdown in Japanese Growth in the 1990s

Tamim Bayoumi

NBER Working Paper No. 7350
Issued in September 1999
NBER Program(s):   EFG   IFM

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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Document Object Identifier (DOI): 10.3386/w7350

Published: Bayoumi, Tamim. "The Morning After: Explaining The Slowdown In Japanese Growth In The 1990s," Journal of International Economics, 2001, v53(2,Apr), 241-259.

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