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.
|Number of pages||16|
|Journal||Journal of the Japanese and International Economies|
|Publication status||Published - Jun 2000|
- Displaced capital