The Morning After: Explaining the Slowdown in Japanese Growth in the 1990s
Working Paper 7350
DOI 10.3386/w7350
Issue Date
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.
Published Versions
Bayoumi, Tamim. "The Morning After: Explaining The Slowdown In Japanese Growth In The 1990s," Journal of International Economics, 2001, v53(2,Apr), 241-259. citation courtesy of