Japan’s so-called Lost Decade of the 1990s presents a unique case study of an economy with a recent severe and prolonged recession, with large changes in the labor market and fiscal policy as the main policy available to the government. Japanese unemployment rate surged from 2.1% in 1991 to 5.4% in 2002. Meanwhile, the Japanese economy experienced a rise in government expenditures, while taxes remained fairly stable. This paper quantitatively evaluates the impact of these changes in fiscal policies on labor market variables, in particular the unemployment rate, during the 1990s. We build, calibrate, and simulate a dynamic general equilibrium model with search frictions in the labor market, a productive government sector, heterogenous government spendings, and different categories of taxes. Our model is able to reproduce the paths of the main labor market variables, and the counterfactual experiments show that the changes that took place in the different spending components affected the unemployment rate heterogeneously, although overall they kept unemployment lower than it could have been. We also find that had the government also implemented countercyclical tax policies, unemployment would not have risen as much as it did by 2002.

日本所谓的 1990 年代迷失的十年提供了一个独特的案例研究，该案例研究了一个经济体最近经历了严重而长期的衰退，劳动力市场和财政政策的巨大变化是政府可以采取的主要政策。日本的失业率从 1991 年的 2.1% 飙升至 2002 年的 5.4%。与此同时，日本经济经历了政府支出的增加，而税收保持相当稳定。本文定量评估了 1990 年代财政政策的这些变化对劳动力市场变量，特别是失业率的影响。我们建立、校准和模拟了一个动态一般均衡模型，其中包含劳动力市场中的搜索摩擦、生产性政府部门、异质政府支出和不同类别的税收。我们的模型能够再现主要劳动力市场变量的路径，反事实实验表明，不同支出组成部分发生的变化对失业率的影响是异质的，尽管总体上它们使失业率保持在低于本来应该的水平。我们还发现，如果政府也实施逆周期税收政策，失业率不会像 2002 年那样上升。