Can it Be Japan's Savior?

36 Pages Posted: 20 Jul 2006  

Fumio Hayashi

National Graduate Institute for Policy Studies

Koji Nomura

Keio University - Keio Economic Observatory

Date Written: November 2005

Abstract

This paper constructs a multi-sector model to take explicit account of the very sharp change in the relative price between non-IT and IT goods. The model is calibrated to the Japanese economy, and its solution path from 1990 on is compared to Japan's macroeconomic performance in the 1990s. Compared to the one-sector analysis of Japan in the 1990s in Hayashi and Prescott (2002), our model does slightly better or just as well in accounting for Japan's output slump and does worse in accounting for the capital-output ratio. We also show that, to revive a 2% long-term growth in percapita GDP, Japan needs to direct 10% of private total hours to the IT sector.

Suggested Citation

Hayashi, Fumio and Nomura, Koji, Can it Be Japan's Savior? (November 2005). NBER Working Paper No. w11749. Available at SSRN: https://ssrn.com/abstract=842483

Fumio Hayashi (Contact Author)

National Graduate Institute for Policy Studies ( email )

Roppongi 7-22-1
Minato-ku
Tokyo, 106-0032
Japan

HOME PAGE: http://https://sites.google.com/site/fumiohayashi/home

Koji Nomura

Keio University - Keio Economic Observatory ( email )

2-15-45 Mita, Ninato-ku
Tokyo, 108-8345
Japan

Paper statistics

Downloads
80
Rank
254,171
Abstract Views
1,097