IDEAS home Printed from https://ideas.repec.org/a/esj/esriea/157a.html
   My bibliography  Save this article

The EPA Short-Run Macroeconometric Model of the Japanese Economy-Basic Structure, Multipliers, and Economic Policy Analyses- (in Japanese)

Author

Listed:
  • Masahiro Hori
  • Susumu suzuki
  • Osamu Kayasono

Abstract

This ANALYSIS is composed of two parts. The first part, a paper titled The Short-Run Macroeconometric Model of the Japanese Economy-Basic Structure and Multipliers, is an introduction to the newly released EPA model of the Japanese economy. The model is a quarterly based econometric model developed to analyze flexibly the short-run aspects of the Japanese economy with the latest data, and has a much simpler structure than that of the Japanese model in the EPA World Economic Model 5th Version (Masubuchi et al. [1995]). The second part, Historical Transition of Fiscal Multiplier and Structure of Macro Models, is a daring use of our model to settle an important polemical policy issue. It argues that the widely diffused assertion that the short-run fiscal multiplier in Japan is getting smaller is just a figment of model structures. I. The Short-Run Macroeconometric Model of the Japanese Economy: Basic Structure and Multipliers The model is basically a demand-oriented, traditional Keynesian-type model with the IS-LM-BP framework; however, it adopts current progress in econometrics, such as unit-root, co-integration, and error-correction. Although the use of the new techniques improves the model's statistical legitimacy, and its simpler structure makes our analysis more flexible, those alterations do not cause large changes in the short-run properties of the model. The followings are some of the properties of the results of our policy simulations. The peak of fiscal multiplier, i.e., the effect of government investments of GDP, is about 1.3 in Japan. The effect of income-tax reduction is smaller due to its leak to household savings. Monetary policy takes some time before its effects become evident. II. Historical Transition of Fiscal Multiplier and Structure of Macro Models The second paper concentrates on the polemical proposition that the Keynesian multiplier of government investments in Japan declined after the burst of the bubble economy in the late 1980s. First, it derives theoretical formulae to describe the fiscal multiplier in our flexible price setting, and sorts out conceivable channels of multiplier decline. Second, it empirically examines the validity of the proposition. Through a multi faceted inquiry, especially through a multiplier comparison among models with exactly the same specification and with different data periods, it argues that the proposition is just a figment of model builder's conversions and is not empirically established.

Suggested Citation

  • Masahiro Hori & Susumu suzuki & Osamu Kayasono, 1998. "The EPA Short-Run Macroeconometric Model of the Japanese Economy-Basic Structure, Multipliers, and Economic Policy Analyses- (in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 157, pages 3-179, October.
  • Handle: RePEc:esj:esriea:157a
    as

    Download full text from publisher

    File URL: http://www.esri.go.jp/jp/archive/bun/bun157/bun157a.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esj:esriea:157a. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: HORI nobuko (email available below). General contact details of provider: https://edirc.repec.org/data/esrgvjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.