Friday, December 11, 2015

Japan's RGDP growth

I wanted to give this treatment to Japan (at least as far as the RGDP model goes towards the end), but unfortunately I was unable to find good data for the total employed population (for the RGDP fluctuations). So we're just left with trends. Anyway, the price level for Japan last discussed here is below:

I have only occasionally shown the NGDP-M0 path for Japan as well. The thing is that it is such a short segment of data (1994-present) that it's really hard to get an assessment of the model errors. Here's the fit at roughly the same scale I show the US NGD-M0 path:

Really, we don't have a long NGDP time series. If anyone has a good source out there, let me know. One result of this is the NGDP trend:

The interesting thing is that, like in the price level graph, it appears Abe has benefited from taking office (at the beginning of 2013) at the peak of a negative fluctuation (in both NGDP and inflation). The mean reversion (and fiscal stimulus) has made it look like "monetary Abenomics" has done something. The resulting trend RGDP growth looks like this:

The real story appears to be a negative fluctuation in inflation and NGDP around the time Abe takes office coupled with real growth on the heels of the financial crisis. The upward trend in RGDP starts at least a year before Abe, if not during the trough of the 2008 financial crisis.

In a sense, Abe has benefited from timing in the same way Jeb Bush did, except Abe came in at the bottom of a trough rather than exiting just before a bubble burst. 



    1. Thanks!

      I had the monetary data, just not NGDP data :)


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