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The Japanese Depression in the Interwar Period: A General Equilibrium Analysis
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Hikaru Saijo
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September 12, 2008
This paper studies the Japanese depression in the interwar period using the business cycle accounting methodology and a general equilibrium model with time-varying markups. I find that the initial slowdown of the economy can be explained by a decline in productivity. However, I also find that when only productivity change is taken into account, a prototype neoclassical growth model predicts that in the 1930s, output recovers more rapidly than is actually supported by the data. Using restrictions from theory, I quantify the contribution of an increase in markups in the manufacturing and mining sectors and find that a substantial fraction of the weak recovery can be explained by this factor. I argue that this increase in markups is caused by government-promoted cartelization.
Published Online: 2008-9-12
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- The Importance of Industrial Policy in Quality-Ladder Growth Models
- The Evolution of International Output Differences (1970-2000): From Factors to Productivity
- Non-Linearities and Unit Roots in G7 Macroeconomic Variables
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