Preface ......................................................... v
Part I. The Japanese Business Cycle
Chapter 1 The Business Cycle in Japan .......................... 3
1.1 Introduction ............................................... 3
1.2 Business Cycle Dating in Japan ............................. 4
1.3 Characteristics of the Business Cycle Prior to the 1990s ... 9
1.4 Duration of the Business Cycle ............................ 13
1.5 Quantity Adjustment over the Business Cycle ............... 15
1.6 Price Adjustment over the Business Cycle .................. 25
1.7 Concluding Remarks ........................................ 32
Chapter 2 The Business Cycle and Macroeconomic Stabilization
Policies: Theoretical Issues and the Japanese
Experience .......................................... 35
2.1 Introduction .............................................. 35
2.2 Points of Dispute on Macroeconomic Stabilization
Policies .................................................. 36
2.3 Macroeconomic Stabilization Policies in Japan: Through
the Mid 1990s ............................................. 42
2.4 Macroeconomic Stabilization Policies since the Mid
1990s ..................................................... 49
2.5 Subsequent Developments ................................... 69
2.6 Concluding Remarks ........................................ 75
Chapter 3 The Japanese Economy in Retrospect: Bubble
Economy, Long-term Slump and Recovery ............... 79
3.1 Introduction .............................................. 79
3.2 Rising Asset Prices ....................................... 80
3.3 The Bursting of the Bubble ................................ 86
3.4 The Bubble and the Business Cycle ......................... 90
3.5 Nonperforming Loans and the Financial System Stability .... 94
3.6 The Japanese Economy Adrift .............................. 102
3.7 Revitalization of the Japanese Economy ................... 109
3.8 Concluding Remarks ....................................... 123
Chapter 4 Macroeconomic Adjustment to the Lehman Shock
in Japan ........................................... 125
4.1 Introduction ............................................. 125
4.2 Business Cycle and Basic Indicators of the Japanese
Economy .................................................. 128
4.3 Responses to the Lehman Shock ............................ 131
4.4 Additional Notable Features .............................. 139
4.5 Fiscal and Monetary Policies ............................. 146
4.6 The Great East Japan Earthquake and the Japanese
Economy .................................................. 152
4.7 Concluding Remarks ....................................... 153
Part II Models of Business Forecast and Business Judgement
Chapter 5 Models of Business Cycles Excluding Policy
Effects ............................................ 159
5.1 Introduction ............................................. 159
5.2 Preliminary Discussion ................................... 161
5.3 Analysis by Probit Model ................................. 165
5.4 Analysis by the RSDFM .................................... 173
5.5 Concluding Remarks ....................................... 180
Chapter 6 Formation of Forecasting by Forecasting Agencies ... 183
6.1 Introduction ............................................. 183
6.2 Empirical Analysis of Economic Forecasts: An Overview .... 185
6.3 Modes of Forecasting by Individual Forecasting
Agencies ................................................. 198
6.4 Fiscal and Monetary Policies and Economic Forecasts ...... 205
6.5 Concluding Remarks ....................................... 209
Chapter 7 Firms' Perceptions of the Business Cycle and
Their Managerial and Financial Conditions .......... 213
7.1 Introduction ............................................. 213
7.2 Different Standards of Business Cycle Judgment—Level or
Trend Change ............................................. 214
7.3 Survey Data on Assessments by Firms of the Business
Cycle .................................................... 218
7.4 Preliminary Discussion for Statistical Analyses .......... 224
7.5 Business Cycle Judgment and Managerial and Financial
Conditions ............................................... 228
7.6 Concluding Remarks ....................................... 234
Chapter 8 Business Confidence Surveyed by Levels and
Directions of Changes: Are They Mutually
Consistent? ........................................ 235
8.1 Introduction ............................................. 235
8.2 Direction of Change vs. Level ............................ 236
8.3 Questionnaire Surveys on Business Confidence ............. 241
8.4 Business Confidence and Questionnaire Responses: BCDI
and BSI .................................................. 245
8.5 Level and Direction of Change in Surveys of Business
Confidence among SMEs .................................... 250
8.6 Consistency of Survey Responses .......................... 253
8.7 Are Economic Agents Consistent? .......................... 257
8.8 Concluding Remarks ....................................... 257
Part III Business Cycle Analyses by Region and Country
Chapter 9 Business Cycle Leads and Lags by Region ............ 261
9.1 Introduction ............................................. 261
9.2 Regional Economic Data ................................... 263
9.3 The DP Matching Method ................................... 265
9.4 Regions and Business Cycle Conditions .................... 270
9.5 Concluding Remarks ....................................... 284
Chapter 10 Business Cycle Judgment by the Cumulative
Prefectural Business Index (CPBI) .................. 287
10.1 Introduction ............................................. 287
10.2 Prefectural CIs with Four Component Indexes .............. 288
10.3 The Prefectural CIs and the Business Cycle Reference
Dates .................................................... 292
10.4 Frequency Distribution Function .......................... 299
10.5 The Cumulative Prefectural Business Index (CPBI) ......... 304
10.6 Concluding Remarks ....................................... 309
Chapter 11 Regional Phillips Curves and Industrial
Structure .......................................... 311
11.1 Introduction ............................................. 311
11.2 Shape of the Regional Phillips Curves .................... 313
11.3 Augmented Phillips Curve ................................. 322
11.4 Industrial Structure and the Characteristics of
Regions .................................................. 336
11.5 Concluding Remarks ....................................... 342
Chapter 12 Business Cycle Comovements between Japanese CI
and Trade with Asia ................................ 345
12.1 Introduction ............................................. 345
12.2 Correlation of Asian Countries as Seen from GDP .......... 346
12.3 Correlation between the Asian and Japanese Economies as
Seen in CIs .............................................. 354
12.4 Correlation between CIs and imports from Asia, by
Category of Goods ........................................ 364
12.5 Concluding Remarks ....................................... 371
Chapter 13 Marginal Productivity Principle and Measurement
Biases in TFP ...................................... 373
13.1 Introduction ............................................. 373
13.2 Previous Studies ......................................... 377
13.3 Biases Inherent to Traditional TFP Measurement ........... 379
13.4 Estimation of the Production Function .................... 381
13.5 Biases Included in Measurement of Traditional TFP ........ 388
13.6 Bias Measurement by Industry in Japan .................... 394
13.7 Concluding Remarks ....................................... 396
References .................................................... 399
Index ......................................................... 407
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