What causes changes in the effects of fiscal policy? A case study of Japan

Fiscal stimulus effectiveness in Japan: evidence from recent policies

“…3 Unlike most other developed countries, the Japanese government had regularly implemented fiscal stimulus packages including increases in public investment and tax breaks even before the 2008 global financial crisis. As a result, a considerable amount of empirical research has examined the effects of fiscal policy in Japan, such as Ihori et al (2003), Miyazaki (2009), Miyazaki (2010), Kozuka et al (2012), Rafiq (2012), Vu (2012), Fujii et al (2013), Kameda (2014), and Morita (2015). Most of these studies suggest that the "conventional" Japanese fiscal stimulus moves, such as increasing public investment and cutting taxes, are ineffective.…”

Are Unconventional Monetary Policy and Large Scale Fiscal Policy Effective?: The Case of Japan

“…Kameda (2014a) showed that the real budget deficit in 2008 brings an approximate 2-3% increase in the Japanese government bond yields, which declined the real GDP by 0.39-0.63% in 2008. Kameda (2014b) found that when the fiscal condition of the government is bad, the aggregate demand effects for expenditures are weak. Ueda, Yoneta, and Ota (2014) showed that current fiscal policies in Japan are distracted from satisfying intertemporal budget constraints and achieving good intertemporal resource allocation.…”

Regime Switches in Japan's Fiscal Policy: Markov‐Switching VAR Approach

“…In contrast,Boneva et al (2016) andUhlig (2010) find that government spending has a limited effect at the ZLB. 3 Two exceptions areKameda (2011), who estimates a threshold VAR model, andShioji (2012), who estimates a time-varying VAR model.4 We impose this monotonicity restriction because we have long data since the mid-1960s. For example, we assume that the period of high growth marked by high volatility until the mid-1970s does not necessarily occur in a stable economy.…”