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Japanese Foreign Investment and the “Land Bubble” *
Author(s) -
Werner Richard A.
Publication year - 1994
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.1994.tb00038.x
Subject(s) - economics , foreign direct investment , portfolio , foreign portfolio investment , investment (military) , portfolio investment , capital (architecture) , net capital rule , foreign capital , term (time) , monetary economics , macroeconomics , capital flows , bubble , international economics , financial economics , market economy , return on investment , open ended investment company , production (economics) , geography , law , archaeology , computer science , quantum mechanics , parallel computing , political science , physics , politics , liberalization
The aim of this paper is to examine the determinants of Japanese net long‐term capital flows in the 1980s and early 1990s. A basic framework is proposed which takes account of Japan's so‐called land bubble by incorporating the interaction of land with the banking sector in a macroeconomic portfolio model of capital flows. Empirical evidence is supportive of the hypothesis that land‐related bank loans have been a major determinant of Japanese net long‐term foreign investment. the hypothesis of substitution between direct and indirect foreign investment also receives support, and areas of future research are mentioned.