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Is it Abenomics or Post-Disaster Recovery? A Counterfactual Analysis

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  • Toshihiko Hayashi

Abstract

This study is an attempt to assess the impact of policy initiatives launched by Japan’s new Prime Minister Shinzo Abe on Japan’s real gross domestic product (GDP) in his first quarter in office. We use as a benchmark for measurement a counterfactual estimate of GDP. Since the Japanese economy is also in the midst of reconstruction from the 2011 Tohoku disaster in the first quarter of 2013, we first estimate the counterfactual GDP that would have materialized in the absence of that disaster. We will use a dummy variable method and the statistical method proposed by Cheng Hsiao and others. We check the validity of these methods with regard to the Kobe earthquake of 1995 and then estimate the post-disaster counterfactual GDP in the absence of the Tohoku disaster. We measure the impact of government policies as the difference between the actual and counterfactual GDP. By doing so, we conclude that government policies have failed to lift Japan’s GDP to the expected level. Even with the help of Abenomics, the gap remains in the range of 6 to 14 trillion yen per year. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Toshihiko Hayashi, 2014. "Is it Abenomics or Post-Disaster Recovery? A Counterfactual Analysis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 20(1), pages 23-31, February.
    • Handle: RePEc:kap:iaecre:v:20:y:2014:i:1:p:23-31:10.1007/s11294-013-9450-z
    DOI: 10.1007/s11294-013-9450-z
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    References listed on IDEAS

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    1. Takeo Hoshi & Anil Kashyap, 2000. "The Japanese Banking Crisis: Where Did It Come From and How Will It End?," NBER Chapters, in: NBER Macroeconomics Annual 1999, Volume 14, pages 129-212, National Bureau of Economic Research, Inc.
    2. Cheng Hsiao & H. Steve Ching & Shui Ki Wan, 2012. "A Panel Data Approach For Program Evaluation: Measuring The Benefits Of Political And Economic Integration Of Hong Kong With Mainland China," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 27(5), pages 705-740, August.
    3. Mampei Hayashi, 2012. "A Quick Method for Assessing Economic Damage Caused by Natural Disasters: An Epidemiological Approach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(4), pages 417-427, November.
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    Cited by:

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    3. Omura, Akihiro & Todorova, Neda & Li, Bin & Chung, Richard, 2016. "Steel scrap and equity market in Japan," Resources Policy, Elsevier, vol. 47(C), pages 115-124.

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    More about this item

    Keywords

    Abenomics; Counterfactual analysis; Post-disaster reconstruction; Disaster gap; C23; O53;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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