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Unformatted text preview: nt from the longer-term structural problem implied by the ‘wrong model’ argument. And there is interesting information in level
terms which is obscured by growth-rate data. The
OECD (1999) provides an illustration. While arguing that there is a serious problem of ‘excess capital’
for Japan, its evidence shows that capital–output
ratios have only just reached the levels of most
European countries (ibid., p. 53), despite very steep
increases in the 1990s. The UK’s capital–output
ratio, showing a steady ‘improvement’ since the
early 1980s, was still above the Japanese level in
1998. This evidence is much more consistent with
both aggregate and sectoral data showing that
Japan’s capital–labour ratio was only around 70–80
per cent of the US level in the 1990s (van Ark and
Pilat, 1993; Pilat, 1994; Wolff, 2000). Thus, despite
the alarming size of bad loans at the depth of the
banking crisis,16 it is hard to find unambiguous
evidence that the system itself was predisposed to
encouraging excessive capital-stock build-up in aggregate. It may still be the case, however, that the Wolff (2000) notes the pro-cyclical movement of produc...
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This note was uploaded on 02/03/2014 for the course ECON 204 taught by Professor Devero during the Summer '13 term at American University of Sharjah.
- Summer '13