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Unformatted text preview: Macroeconomic Issues – Japan, Korea, Taiwan Midterm – 1 hour, then HK and Singapore Today: Talk about macro, mostly about Japan, tie in with financial crisis Chart: Japan’s share of world output goes from 9% in 1958 to peak of 17% in 1990, then declines to about 14% in 2005. Share of world exports goes from about 1.8% in 1950 to peak of 10% in 1985, then declines to 5% in 2005 (decline ragged) Japan’s per capita income as a percentage of the US starts at 20% in 1950, rises to a peak of 85% by 1990, then declines to 70% in 2005. Data matches theory: Income convergence process But why has there been a decline? Chart: Countries’ savings rates Japan saves a lot of income (about 30%), most of it from household sector [Question: Why is the Norwegian ratio so high, almost equal to Japan’s? Also, why were savings rates so high in Canada, Australia, Sweden? (High rates for others probably because need to rebuild capital stock)] Japan does not have such high savings rates in pre-war period Reasons for high savings outlined in Hayashi’s article People got semiannual bonuses But, econometric data does not support bonuses as reason for savings Then created complex models of intergenerational transfers (Life Cycle Hypothesis) Idea: Filial piety, high housing prices, lead to high savings Personal savings rates fell a lot in the 1980s, nowadays only a little higher than US...
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This note was uploaded on 07/12/2008 for the course ECON 324 taught by Professor Noland during the Spring '08 term at Yale.
- Spring '08