The 1990s in Japan: A Lost Decade

By Fumio Hayashi, Edward C. Prescott. 2002

917 citations recorded by the source corpus.

This paper examines the Japanese economy in the 1990s, a decade of economic stagnation. We find that the problem is not a breakdown of the financial system, as corporations large and small were able to find financing for investments. There is no evidence of profitabkle investment opportunities not being exploited due to lack of access to capital markets. The problem then and still today is a low productivity growth rate. Growth theory, treating TFP as exogenous, accounts well for the Japanese lost decade of growth. We think that research effort should be focused on what policy change will allow productivity to again grow rapidly. (Copyright: Elsevier)

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/77f56dc93dbbb0cda246dfb69f3cdbff852ad570

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In Economics and Econometrics

1. Kozo Kiyota
2. Takanobu Nakajima
3. Kiyohiko G. Nishimura
4. P. Kurlat
5. F. Kimura

In Finance

1. Takanobu Nakajima
2. Kiyohiko G. Nishimura
3. Kozo Kiyota
4. P. Kurlat

Citations in the corpus

• Tracking the Slowdown in Long-Run GDP Growth (2017, neutral): “44On the lost decade in Japan, see Hayashi and Prescott (2002). Gordon (2004) examines the absence of the IT boom in Europe.”
• The profitability of banks in Japan (2010, neutral): “Stock market values also declined, real investment declined and the economy entered a long lasting recession (Nakaso, 2001 ; Hayashi and Prescott, 2002 ; Brewer et al , 2003 ; Deckle and Kletzer, 2003 ).”
• Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s (2005, positive): “Hayashi and Prescott (2002)utilized a dynamic macro model to show that the simulated business cycle caused by productivity slowdown follows the actual GDP fluctuations in Japan.”
• Cross-border banking, credit access, and the financial crisis (2012, neutral): “Banking crises and liquidity shocks elsewhere in the world similarly generated considerable academic attention (e.g., Woo (1999); Kang and Stulz (2000); Hayashi and Prescott (2002); Khwaja and Mian (2008); Paravisini (2008)).”
• Collateral, Debt Capacity, and Corporate Investment: Evidence from a Natural Experiment (2007, neutral): “Hayashi and Prescott (2002) point out a slowdown in total factor productivity growth, rather than financial constraints, as the main reason for Japan’s “lost decade of growth.””
• Japanese Saving Rate (2005, neutral): “Fumio Hayashi et al. (1988) find that housing finance institutions and tax policy do not offer a complete explanation of the large gap between the average U.”
• Can China´s Growth be Sustained? A Productivity Perspective (2008, neutral): “Examples are Japan’s lost decade of growth in the 1990s (Hayashi & Prescott, 2002), Argentina’s great depression in the 1980s (Kydland & Zarazaga, 2002), and Ireland’s booms and busts during the four decades up to 1990s (Ahearne, Kydland, & Wynne, 2005).”
• Demographics and Real Interest Rates: Inspecting the Mechanism (2016, neutral): “Together with (and perhaps because of) the financial crisis, Japan has experienced a dramatic slowdown in productivity growth since 1990 (Hayashi and Prescott, 2002).”
• The implications of a graying Japan for government policy (2015, neutral): “Because φj increases with age, population aging will result in an increase in per capita medical expenditures.(13) The government’s share of each household’s medical costs depends on a set of age-specific copayment rates.”
• Lemons Markets and the Transmission of Aggregate Shocks (2013, positive): “…result in an overestimate of the capital stock, which will be captured as lower TFP in future periods.19 This may help explain the long periods of low (measured) productivity growth that follow some financial crises, as documented for instance by Hayashi and Prescott (2002) for Japan in the 1990s.”