Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/64200
Authors: 
Nakatani, Takeshi
Skott, Peter
Year of Publication: 
2006
Series/Report no.: 
Working Paper, University of Massachusetts, Department of Economics 2006-04
Abstract: 
This paper uses a modi.ed 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 appear around 1970, and a combination of high saving rates and slow population growth account for the stagnation of the 1990s. This combination produces a structural liquidity trap and threatens the sustainability of attempts to ensure near full employment through fiscal policy or by running a persistent trade surplus.
Subjects: 
Japan
growth
stagnation
liquidity trap
public debt
multiple equilibria
JEL: 
E12
E63
O53
Document Type: 
Working Paper

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