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Title:Japanese growth and stagnation: A Keynesian perspective PDF Logo
Authors:Nakatani, Takeshi
Skott, Peter
Issue Date: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
Appears in Collections:Working Papers, Department of Economics, University of Massachusetts

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