The effects of fiscal policy in the 1990s in Japan: A VAR analysis with event studies

Fiscal stimulus effectiveness in Japan: evidence from recent policies

“…If we allow the dummy associated with each major policy change to have its own distributed lag effect, we cannot identify the effects of each individual fiscal policy because the times at which they were announced and/or implemented are too close together. To deal with this, we construct dummy variables that take 1 throughout the time period for which the policy was in effect, as in the case of Blanchard and Perotti (2002) and Miyazaki (2010).…”

“…3 Unlike most other developed countries, the Japanese government had regularly implemented fiscal stimulus packages including increases in public investment and tax breaks even before the 2008 global financial crisis. As a result, a considerable amount of empirical research has examined the effects of fiscal policy in Japan, such as Ihori et al (2003), Miyazaki (2009), Miyazaki (2010), Kozuka et al (2012), Rafiq (2012), Vu (2012), Fujii et al (2013), Kameda (2014), and Morita (2015). Most of these studies suggest that the "conventional" Japanese fiscal stimulus moves, such as increasing public investment and cutting taxes, are ineffective.…”

Stock price targeting and fiscal deficit in Japan: Why did the fiscal deficit increase during Japan’s lost decades?

“…The empirical results show that this model can explain Japan's fiscal expenditure reasonably well, especially in the 1990s. Without the stock price targeting, the total amount of biannual fiscal stimulus from 1992 to 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1992199319941995199619971998199920002002200320042005200620072008200920102012. General government financial liabilities in selected OECD countries: (1) gross financial liabilities (2) net financial liabilities.…”

“…Fukuda and Teruyama (1994) tested the sustainability of deficits up to the early 1990s, and Ihori et al, 2003 discussed the same issue in the 1990s. Bayoumi (2001) and Miyazaki (2010) investigated the effects of fiscal policy in the 1990s in Japan, using VAR. Ihori et al, 2001 explored the relationship between political inefficiency and the outcome of the fiscal reconstruction process in the Japanese (national) general account.…”

Teaching the macroeconomic effects of tax cuts with a quasi-experiment

“…The consumption response is larger than previously estimated for tax refunds and more concentrated in nondurables. Hori and Shimizutani (2005), Shimizutani (2006), Hori and Shimizutani (2007) and Miyazaki (2010) find that Japanese tax cuts during the 1990s increased consumer spending; the effects on the temporary cut were short-lived while the permanent cuts increased consumer durable spending significantly and persistently.…”