Displaced Capital and Japanese Economic Growth

Luke Gower; Dominic Wilson

doi:10.1006/jjie.2000.0445

Displaced Capital and Japanese Economic Growth

Luke Gower^*, Dominic Wilson

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

Implicit in many theories of Japan's macroeconomic malaise is the displacement of financial capital. It underpins the widely held view that physical investment has been retarded by the disruptive effects of nonperforming loans on financial intermediation. This paper recognizes that the displacement of capital also has real dimensions. It develops the view that the reemployment of displaced capital can compromise growth, perhaps to the point of perpetuating a recession. This may help to explain Japan's prolonged period of stagnation. J. Japan. Int. Econ., June 2000, 14(2), pp. 105-120. Reserve Bank of Australia, 65 Martin Place, Sydney NSW 2000, Australia; and Goldman Sachs Asia, 68th Floor, Cheung Kong Centre, 2 Queen's Road, Central, Hong Kong, China. Copyright 2000 Academic Press. Journal of Economic Literature Classification Numbers: E22, O16.

Original language	English
Pages (from-to)	105-120
Number of pages	16
Journal	Journal of the Japanese and International Economies
Volume	14
Issue number	2
DOIs	https://doi.org/10.1006/jjie.2000.0445
Publication status	Published - Jun 2000
Externally published	Yes

Keywords

Displaced capital
Growth
Investment

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AB - Implicit in many theories of Japan's macroeconomic malaise is the displacement of financial capital. It underpins the widely held view that physical investment has been retarded by the disruptive effects of nonperforming loans on financial intermediation. This paper recognizes that the displacement of capital also has real dimensions. It develops the view that the reemployment of displaced capital can compromise growth, perhaps to the point of perpetuating a recession. This may help to explain Japan's prolonged period of stagnation. J. Japan. Int. Econ., June 2000, 14(2), pp. 105-120. Reserve Bank of Australia, 65 Martin Place, Sydney NSW 2000, Australia; and Goldman Sachs Asia, 68th Floor, Cheung Kong Centre, 2 Queen's Road, Central, Hong Kong, China. Copyright 2000 Academic Press. Journal of Economic Literature Classification Numbers: E22, O16.

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Displaced Capital and Japanese Economic Growth

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Keywords

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