Abstract
This paper presents a simple heterogeneous agent model to show that shocks that reduce aggregate borrowing capacity of producers under borrowing constraints cause endogenous productivity slowdowns through declines in asset prices and biased selections of producers. These dynamics of the model replicate the qualitative features of the Japanese economy during the 1990s, including a decline in the within effect in total factor productivity growth decomposition as well as default on mortgage loans. Policy experiments demonstrate that foreclosure restrictions already in place mitigate an exogenous productivity slowdown, but that a tightening of foreclosure restrictions causes an endogenous productivity slowdown.
| Original language | English |
|---|---|
| Pages (from-to) | 104-130 |
| Number of pages | 27 |
| Journal | Japanese Economic Review |
| Volume | 63 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2012 Mar |
| Externally published | Yes |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Endogenous selection of producers, asset prices, and productivity slowdown. / Tomura, Hajime.
In: Japanese Economic Review, Vol. 63, No. 1, 03.2012, p. 104-130.Research output: Contribution to journal › Article
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TY - JOUR
T1 - Endogenous selection of producers, asset prices, and productivity slowdown
AU - Tomura, Hajime
PY - 2012/3
Y1 - 2012/3
N2 - This paper presents a simple heterogeneous agent model to show that shocks that reduce aggregate borrowing capacity of producers under borrowing constraints cause endogenous productivity slowdowns through declines in asset prices and biased selections of producers. These dynamics of the model replicate the qualitative features of the Japanese economy during the 1990s, including a decline in the within effect in total factor productivity growth decomposition as well as default on mortgage loans. Policy experiments demonstrate that foreclosure restrictions already in place mitigate an exogenous productivity slowdown, but that a tightening of foreclosure restrictions causes an endogenous productivity slowdown.
AB - This paper presents a simple heterogeneous agent model to show that shocks that reduce aggregate borrowing capacity of producers under borrowing constraints cause endogenous productivity slowdowns through declines in asset prices and biased selections of producers. These dynamics of the model replicate the qualitative features of the Japanese economy during the 1990s, including a decline in the within effect in total factor productivity growth decomposition as well as default on mortgage loans. Policy experiments demonstrate that foreclosure restrictions already in place mitigate an exogenous productivity slowdown, but that a tightening of foreclosure restrictions causes an endogenous productivity slowdown.
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U2 - 10.1111/j.1468-5876.2011.00539.x
DO - 10.1111/j.1468-5876.2011.00539.x
M3 - Article
VL - 63
SP - 104
EP - 130
JO - Japanese Economic Review
JF - Japanese Economic Review
SN - 1352-4739
IS - 1
ER -