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Japan's Bubble, Deflation, and Long-term Stagnation$
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Koichi Hamada, Anil K Kashyap, and David E. Weinstein

Print publication date: 2010

Print ISBN-13: 9780262014892

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262014892.001.0001

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Consumption, Land Prices, and the Monetary Transmission Mechanism in Japan

Consumption, Land Prices, and the Monetary Transmission Mechanism in Japan

(p.175) 6 Consumption, Land Prices, and the Monetary Transmission Mechanism in Japan
Japan's Bubble, Deflation, and Long-term Stagnation

John Muellbauer

Keiko Murata

The MIT Press

This chapter examines the effect of interest rates on consumption in Japan and explains why monetary transmission via Japan’s household sector is significantly different from that operating in the United States and other industrial countries. It presents an empirical analysis of Japanese consumption and household saving behavior, and explores the role of the household sector in the monetary transmission mechanism in Japan. Using models for aggregate consumption based more on the solved out consumption function approach than the Euler equation approach, the chapter looks at income growth and income uncertainty, along with the role of housing wealth, demography, and residential land prices.

Keywords:   interest rates, consumption, Japan, monetary transmission, household sector, household saving, income, wealth, demography, land prices

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