TY - JOUR
T1 - Japan's financial crises and lost decades
AU - Hirakata, Naohisa
AU - Sudo, Nao
AU - Takei, Ikuo
AU - Ueda, Kozo
N1 - Funding Information:
The authors would like to thank Kosuke Aoki, Hitoshi Mio, Masashi Saito, Tsutomu Watanabe, the participants at SWET and the staff of the Bank of Japan for their useful comments. Ueda is also thankful for financial support from Nomura Foundation . The views expressed in this paper are those of the authors and do not necessarily reflect the official views of the Bank of Japan.
Publisher Copyright:
© 2016
PY - 2016/12/1
Y1 - 2016/12/1
N2 - In this paper, we explore the role of financial intermediation malfunction in macroeconomic fluctuations in Japan. To this end we estimate, using Japanese data, a financial accelerator model in which the balance sheet conditions of entrepreneurs in a goods-producing sector and those of a financial intermediary affect macroeconomic activity. We find that shocks to the balance sheets of the two sectors have been quantitatively playing important role in macroeconomic fluctuations by affecting lending rates and aggregate investments. Their impacts are prominent in particular during financial crises. Shocks to the entrepreneurs’ balance sheets have played a key role in lowering investment in the bubble burst during the early 1990s and in the global financial crisis during the late 2000s. Shocks to the financial intermediaries’ balance sheets have persistently lowered investment throughout the 1990s.
AB - In this paper, we explore the role of financial intermediation malfunction in macroeconomic fluctuations in Japan. To this end we estimate, using Japanese data, a financial accelerator model in which the balance sheet conditions of entrepreneurs in a goods-producing sector and those of a financial intermediary affect macroeconomic activity. We find that shocks to the balance sheets of the two sectors have been quantitatively playing important role in macroeconomic fluctuations by affecting lending rates and aggregate investments. Their impacts are prominent in particular during financial crises. Shocks to the entrepreneurs’ balance sheets have played a key role in lowering investment in the bubble burst during the early 1990s and in the global financial crisis during the late 2000s. Shocks to the financial intermediaries’ balance sheets have persistently lowered investment throughout the 1990s.
KW - Banks’ Balance sheet
KW - Financial accelerators
KW - Japan's lost decade
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U2 - 10.1016/j.japwor.2016.07.003
DO - 10.1016/j.japwor.2016.07.003
M3 - Article
AN - SCOPUS:84992690900
SN - 0922-1425
VL - 40
SP - 31
EP - 46
JO - Japan and The World Economy
JF - Japan and The World Economy
ER -