Regional heterogeneity, the rise of public debt and monetary policy in post-bubble Japan: lessons for the EMU

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Both Japan and parts of the European Monetary Union have experienced boom and bust in stock and real estate markets, which have been followed by a lasting crisis. The paper analyses the role of a high degree of regional heterogeneity for public debt and monetary policy in the context of crisis. It is shown for Japan that the attempts to maintain regional cohesion via a regional transfer mechanism has contributed to the unprecedented rise in public debt and persistent monetary expansion. Econometric estimations show that in Japan regional redistribution of funds has ensured homogeneous living conditions across Japanese regions preand post-crisis. The side condition is monetary expansion. A similar effect could emerge in Europe, if the crisis persists. Terms of use: Documents inJEL-Codes: H120, H770, E520.

The Long‐Term Economic Impact of Abenomics: Evidence from the Synthetic Control Method

“…As Fischer and Schnabl (2018) point out, studying Japanese economic policy is important because many high‐income OECD countries are experiencing similar economic conditions as Japan did 15 to 20 years ago. The lessons learned from Japan's experience can provide valuable guidance for implementing economic reforms in an era of global economic slowdown most pronounced among high‐income OECD economies.…”