Will Japan lag behind Korea? A theoretical and empirical analysis of a transition to new economy

Abstract

In this essay, we will investigate the remarkably different economic performance of Japan and other Asian countries before and after the Asian economic crisis. Japan did not suffer much from the crisis, but it has not recovered from it, while other Asian countires were severely afftected by the crisis, hut they quickly recovered from it. We will set up a simp le matching model and show that we can explain these contrasting performance by technological adoption. We will also undertake some empirical analyses that support the prediction of our theoretical model.