Working Paper: NBER ID: w2614
Authors: Jeffrey Sachs; Peter Boone
Abstract: Policy discussions in Japan have increasingly recognized the important role of land values and land-use patterns in Japanese macroeconomic adjustment. In Japan in recent years, land wealth constitutes more than half of financial wealth, a proportion that is much higher than in the United States and other industrialized economies. Consequently, shifts in land-use patterns can have important effects on Japanese savings and investment patterns, and thereby on the Japanese trade balance and current account. This papers studies the implications of land-use policies for the Japanese macroeconomy using both a theoretical model and a multi- sectoral dynamic simulation model.
Keywords: Japan; Land Use; Macroeconomic Adjustment; Trade Balance
JEL Codes: F32; O23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in land use patterns (R14) | Japanese savings and investment behaviors (D14) |
| Japanese savings and investment behaviors (D14) | Trade balance (F14) |
| Rise in land values (R52) | Reduction in consumption (D12) |
| Reduction in consumption (D12) | Increase in national savings (E21) |
| Lower land prices (R31) | Decrease in consumption (E21) |
| Decrease in consumption (E21) | Increase in housing investment (R31) |
| Decline in food prices (Q11) | Lower land values (R52) |
| Lower land values (R52) | Impact on savings and investment decisions (G11) |
| Japanese fiscal expansion (E62) | Reduce trade surpluses (F19) |