Working Paper: NBER ID: w9384
Authors: Anil K. Kashyap
Abstract: This paper makes three contributions. First, I report information on the size of the Japanese financial crisis. Drawing principally on work by Fukao (2003) and Doi and Hoshi (2003) I estimate that the current taxpayer liability for losses incurred but yet to be recognized is likely to be at least 24% of GDP. Second, I explain why it has been so difficult to end the crisis. Third, I sketch the likely ingredients of what will be required to successfully resolve the crisis. The overarching principle is that Japan's banks, insurance companies, and government financial agencies all suffer different problems and require different solutions. But all three sectors are connected, and a failure to tackle concurrently the problems of all three promises to doom any reform plan.
Keywords: No keywords provided
JEL Codes: G28; G21; G22; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial sector's failures (G28) | public financial exposure (G32) |
| interconnectedness of banks, insurance companies, and government agencies (F65) | concurrent approach to reform (P41) |
| poor macroeconomic performance and specific sectoral issues (E69) | prolonged financial crisis (G01) |
| deflationary environment (E31) | bank profitability (G21) |
| financial health (G50) | economic recovery (E65) |
| financial sector weaknesses (F65) | broader economic stagnation (E66) |