Japan: the structural change of the economy in 1992
DOI:
https://doi.org/10.22201/fesa.29928273e.2025.11.96Keywords:
State capacity, big government, structural change, Japanese economy.Abstract
This paper addresses the structural change that occurred in Japanese economic institutions in the 1990s.Post-war Japan ran a version of non-liberal capitalism with institutions that explicitly established relationships of long-term coordination and specific growth objectives. However, in the 1980s, the maturing economy, the economic convergence with the West, and a large commercial surplus with the United States forced the establishment of reforms that weakened the state capacity, created a bubble economy, and led to a crisis in the early 1990s. This initiated a period of decades of stagnation that persists to this day. Using the Bai-Perron and Chow methods, it is herein proven that a structural change did occur in the 1990s, and it is argued that this can be put down to a deliberate weakening of state capacity in Japan through market-oriented reforms.
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