As explained in chapter 1, in 1998 the Japanese government abandoned the fiscal reconstruction plan and increased issues of government bonds and spending on public works. Spending on public works has been very high in Japan among developed countries. The ratio of general government fixed capital formation to GDP amounted to 8% in 1998, compared with 1 to 3% in other industrial countries.
KeywordsUnit Root Public Work Public Investment Capital Good Private Consumption
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