The Economic Policies in Japan During the Last 30 Years: An Econometric Analysis

Abstract

This paper analyses the Japanese economic growth since 1970 with particular attention for the last decade. After a brief discussion on the qualitative behaviour of macroeconomic variables, a survey of literature presents the ideas of various models. This is useful for the econometric analysis applied here, which consists in a smooth transition model, such as LSTAR. For the last decade a deeper analysis is carried out with a VAR model to test if lending view is necessary in explaining the business cycle. These models suggest that both fiscal and monetary policies were not very efficient. Total lending also accelerated the crisis.

Keywords: Japan, transition models