Japan Out of the Lost Decade: Divine Wind or Firms' Effort?

41 Pages Posted: 1 Nov 2012

See all articles by Kazuo Ogawa

Kazuo Ogawa

Osaka University - Institute of Social and Economic Research (ISER)

Mika Saito

International Monetary Fund (IMF)

Ichiro Tokutsu

Konan University

Date Written: July 2012

Abstract

A surge of exports in the 2000s helped Japan exit the severe decade-long stagnation known as the lost decade. Using panel data of Japanese exporting firms, we examine the sources of the export surge during this period. One view argues that the so-called "divine wind" or exogenous external demand boosted Japanese exports. The other view emphasizes the role of supply factors such as productivity gains, materialized after long-fought restructuring efforts during the lost decade. Estimating the firm-level export function allows us to assess the relative importance of these demand and supply factors. Evidence shows that firms' efforts were more important than the divine wind.

Keywords: Lost Decade, Export, Total Factor Productivity, Price-cost Margin, Economic Models, Export Growth, Export Performance, Manufacturing, Statistical Annexes

JEL Classification: E44, F14, O30

Suggested Citation

Ogawa, Kazuo and Saito, Mika and Tokutsu, Ichiro, Japan Out of the Lost Decade: Divine Wind or Firms' Effort? (July 2012). IMF Working Paper No. 12/171. Available at SSRN: https://ssrn.com/abstract=2169716

Kazuo Ogawa (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan
+81 6 6879 8570 (Phone)

Mika Saito

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Ichiro Tokutsu

Konan University ( email )

8-9-1 Okamoto Higashinadaku
Kobe 658-8501
Japan

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